In a recent article published by Bloomberg, Mark contributed on behalf of Bitpro to the movement in the market from crypto mining toward high-performance compute (HPC) business models currently undertaken by some of the largest players in the GPU mining industry. Here’s our TL: DR; version of the original article by author David Pan.
Following the transition of the Ethereum blockchain from proof of work to proof of stake last September, the demand for specialized processors used for crypto mining virtually evaporated. However, this presented an opportunity for many in the mining infrastructure sector to repurpose their GPU-based equipment for another booming industry: artificial intelligence (AI).
The strategy involves reinvesting from the GPU mining infrastructure to new cards and workloads. The use of these chips for high-performance computing (HPC) services has proven profitable, accounting for a significant portion of overall revenue in 2022. Many of the largest players in the GPU mining industry invested heavily in GPUs in the past and have ambitious plans to ramp up their HPC revenue over the next few years.
However, not all crypto miners are positioned to capitalize on this shift. From our perspective, only between 5% and 15% of existing crypto-oriented GPUs can be repurposed for AI and related applications like computer vision and generative graphic design. Furthermore, moving towards offering HPC services for AI will require a substantial investment in additional hardware and staff, at a time when many miners are grappling with financial difficulties due to the downturn in cryptocurrencies. However, this transition could offer a chance to recover some of the $15 billion we estimate was collectively spent on these processors.
The competitive landscape in HPC is formidable, with major data service providers already having widely used tooling systems and support staff available to AI clients. However, the mining sector’s experience in energy management could provide a competitive edge in this energy-intensive field. The shift to HPC won’t be easy, but for those that successfully pivot, it could prove highly lucrative.