Hive Digital Technologies Revamps Business Model to Meet Growing Demand for AI Computing Power

When Ethereum transitioned from a proof-of-work to a proof-of-stake mechanism in 2022,  crypto miner Hive Digital had to revamp its business model.

Crypto miner Hive Digital has shifted its focus to artificial intelligence applications after Ethereum's transition to proof-of-stake.

The company's Nvidia graphic processing units (GPUs), purchased in a $66 million investment in 2021, are now being used to power AI workloads.

According to Hive executives, the GPUs can generate up to $1 per hour in AI tasks, compared to $0.12 per hour in crypto mining.

The company's data centers in New Brunswick and Sweden are being upgraded to support the AI workloads, with plans to add 100 megawatts of mining capacity in Paraguay.

Despite the pivot to AI, Hive's executives still prioritize Bitcoin and aim to increase its holdings in the long term.

Crypto miner Hive Digital (TSX: HIVE) has pivoted its operations toward artificial intelligence applications following Ethereum's ( ETH) transition to a proof-of-stake mechanism in 2022.

The company's Nvidia graphic processing units (GPUs), initially acquired for crypto mining, have now been largely shifted to power AI workloads, marking a new direction in Hive's technological focus.

In an exclusive interview with Cointelegraph’s editor Sam Bourgi, Hive executives Frank Holmes and Aidan Killick outlined how the firm is leveraging its infrastructure to meet the growing demand for AI computing power.

Speaking to Cointelegraph, the executives highlighted the significant revenue disparity between AI and crypto mining, with the former generating substantially higher returns.

“We put our GPUs in AI and realized that instead of making $0.12 an hour, which is what you make in crypto mining, you can make up to $1 an hour in AI,” said Killick, who serves as Hive’s president and chief operating officer.

Emphasizing the demand for AI computing power, Killick further noted: “Institutions are much more interested in us with our AI than Bitcoin.”

According to Holmes, Hive's chairman, the company's strategy involves operating its mining hardware to maximize return on investment, with the ultimate goal of generating free cash flow to fund growth.

“We mine our machines to not only repay but generate free cash flow until we hit their break-even, and then we upgrade,” said Killick.

Emphasizing Hive's strong financial performance, Killick highlighted that the company has reported profitable gross mining margins for the past three years and generates cash flow from operations to fund growth without significant shareholder dilution.

In the post-Bitcoin halving environment, many miners have struggled with profitability as hash prices have hit record lows of $40 per peta hash per day, but Killick described the prices as a “soft landing.”

“It's really good for running the business, but the long term is Bitcoin,” said Holmes of the company's pivot to AI.

Moreover, Hive is planning to expand its mining operations in Latin America, with the company's executives stating that the goal in Paraguay is to achieve 2-3% of the global Bitcoin network hash rate.

“We believe in Bitcoin, and we want green and clean coins in our balance sheet because we know they’re going to be more valuable,” said Holmes.