Hive Digital Shifts Focus from Crypto Mining to AI Data Centers

Hive Digital is strategically pivoting from cryptocurrency mining to artificial intelligence (AI) data centers to capitalize on the increasing demand for AI computing power while also bolstering its balance sheet with sustainably mined Bitcoin.

Following Ethereum's shift from proof-of-work to proof-of-stake in 2022, Hive had to rethink its business model. The company repurposed its Nvidia graphic processing units (GPUs), initially acquired for $66 million in 2021, to support AI applications.

In an exclusive interview with Cointelegraph’s Sam Bourgi, Hive executives Frank Holmes and Aidan Killick discussed how the company is leveraging its infrastructure to meet the burgeoning demand for AI computing.

Increased Revenue from AI

Hive's foray into AI has proven financially fruitful. According to Killick, the company’s president and COO, the repurposed Nvidia GPUs can generate up to $1 per hour from AI tasks, significantly outpacing the $0.12 per hour generated from crypto mining. With the upcoming introduction of Nvidia’s H100 chips, which are tailored for AI applications, that figure could rise to $2.50 per hour. “Institutions are much more interested in our AI capabilities than Bitcoin,” Holmes noted.

To accommodate these AI workloads, Hive is upgrading its data centers in New Brunswick, Canada, and Sweden, adding enhanced cooling systems and power redundancy. The company is also exploring stable and cost-effective energy sources.

In July, Hive announced plans to construct a 100-megawatt mining facility in Paraguay, marking its first venture in the country and expected to more than double its mining hashrate. “Paraguay is a tremendous opportunity for us, especially with its hydro energy resources. We aim to be leaders in grid balancing,” Killick explained.

Bitcoin Remains Essential

Despite the shift towards AI, Bitcoin (BTC) continues to play a crucial role in Hive’s strategy. While the AI focus is beneficial for the company's operations, Holmes emphasized that “the long-term vision is still Bitcoin.”

Hive aims to maximize the return on investment (ROI) from its mining hardware. “We utilize our machines not only to repay investments but also to generate free cash flow until we reach break-even, after which we consider upgrades,” Killick stated.

The company has reported profitable gross mining margins for the past three years, using operational cash flow to fuel growth without significantly diluting shareholder value. In a challenging post-Bitcoin halving environment, many miners have faced profitability issues as hash prices dropped to record lows of $40 per petahash per day. However, Killick sees this as a “soft landing,” pointing out that their new Bitmain S21 machine generates about $0.10 per kilowatt-hour.

Hive’s expansion into Latin America is also linked to its Bitcoin mining operations. The executives expressed a goal of capturing 2-3% of the global Bitcoin network through their efforts in Paraguay. “We believe in Bitcoin and want to ensure our balance sheet reflects green and clean coins, as they are likely to be more valuable in the future,” Holmes concluded.