Avi Felman says he's bullish on bitcoin miners, but not strictly because of bitcoin's potential.
With a turn to providing high-performance computing, or HPC, companies are finding new ways to expand their revenue stream beyond ASIC mining.
cabin 8better known as a bitcoins mining company with facilities in Alberta, Canada and Texas, is a great example, he says. Thanks to its high-capacity computing infrastructure, Hut 8 recently signed a contract to provide HPC for clients in the Canadian healthcare sector.
In a recent 1000X podcast (Spotify/Apple), GoldenTree's director of digital asset trading speaks with Cumberland's global director of trading, Jonah Van Bourg, about the revenue expansion strategy.
It's not about the hardware
With the growing potential for more cash flow, one might expect mining companies to package their SO C for greener pastures, leaving behind the precarious business of cryptomining and its razor-edge profit margins.
But it's not about the chips, says Felman, "it's a whole different business."
It's more about access to facilities and people who know the business, Felman says. Cooling, for example, is important in any high-capacity computing environment, he says. "Both in bitcoin mining and HPC, they have all of that set up."
โThey have the people who know how to develop those services. They have the warehouses and facilities. They have the energy contractsโ.
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The actual product provided to customers, Felman explains, โis radically different and requires a decent amount of upfront investment. But the general operations are very similar,โ he says.
Large-scale mining companies like Hut 8, Iris Energy, Hive and Cipher can repurpose facilities to provide HPC, diversifying the business and generating more revenue, Felman says. "There seems to be an enormous amount of demand."
A healthier bitcoin market, for starters
Felman clarifies that current ASIC hardware (highly specialized computers designed strictly for bitcoin mining) cannot be diverted in order to provide HPC to customers. But diversifying the services provided through its infrastructure and knowledge could allow mining companies to be financially "healthier," he says.
The move could also benefit bitcoin's market price (BTC), he argues, because miners may be less pressured to sell in fearful markets. The need for mining companies to sell their new bitcoins on a regular basis just to survive acts as a constant drag on prices.
โMiners will be liquidated less frequently as they become better and stronger businesses.โ
Van Bourg adds, "it would surely make the market healthier."
โI would also tell the world,โ he says, โcryptocurrencies have provided a number of infrastructure games that are relevant beyond cryptocurrency.โ
The move signals the presence of a growing market for โcomputer facilities for specific purposessays Van Bourg. Bitcoin mining technology, he says, "set the rails for other applications" that can now take advantage of the technology in new ways.
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