Tesla CEO Elon Musk is taking matters into his own hands.
Over the past two years, Tesla has been building a supercomputer named Dojo. Dojo is able to process an enormous amount of video data that will help make the company’s self-driving technology better.
In its most recent earnings call, Musk said that Tesla had to build Dojo because of a major problem the world is beginning to face.
You see, there’s a shortage of graphics processing units (GPUs).
These chips help create ultra-realistic graphics in video games, perform complex calculations for scientists, and power generative artificial intelligence (AI) apps like ChatGPT.
The latter is creating a surge in demand for GPUs, and chip manufacturers are having a tough time keeping up.
Microsoft and Amazon have said that they’re having trouble getting as many GPU chips as they need.
Sam Altman, the CEO of OpenAI and creator of ChatGPT, testified to Congress that the GPU shortage is hurting the chatbot’s ability to perform its tasks.
This shortage has created a lucrative opportunity for companies across different industries to come in and benefit.
One of those industries, surprisingly, is bitcoin miners.
In today’s essay, I’ll show you how these miners are taking advantage of the shortage.
Plus, with one simple investment, you can get exposure to this growing trend.
From Blocks to AI
Bitcoin mining stocks have crushed it so far this year. After seeing their value crushed during the last Crypto Winter, they’ve begun to rebound along with the overall crypto market.
The top five bitcoin mining stocks by market cap are up an average 342% since the year began… compared with a 16% gain in the S&P 500.
Bitcoin mining is the process of validating transactions on bitcoin’s blockchain. To do so, miners use computers that are able to run trillions of calculations per second in order to come up with the correct result.
Once those transactions are validated, miners earn a reward of 6.25 bitcoins per transaction and a transaction fee.
Bitcoin mining companies have built up a tremendous amount of computing power to keep a competitive edge.
Many of the largest miners have tens of thousands of mining machines set up in vast facilities.
Over the last year, bitcoin miners have witnessed the surge in popularity of AI tools and applications.
And with the GPU shortage in full force, those same miners have put themselves in a position to benefit.
Broadly, bitcoin miners have begun repurposing their older GPUs.
The original purpose of these machines was to mine bitcoin and other cryptos. They’ve since been reprogrammed to offer a broader range of high-performance computing services.
That’s exactly what Hut 8 Mining has done.
It recently purchased five data centers throughout Canada and has filled them with its older GPUs.
The company announced that the machines are primarily performing visual effects rendering and machine learning for clients in the gaming and entertainment industries.
It’s also delivering computing power to firm XYZ AI to support the text-to-graphic features of its platform.
Hut 8 Mining currently earns about 24% of its revenue from this computing segment.
Hive Digital Technologies, another bitcoin miner, announced it has begun offering its services to companies in need of computing power to run their AI apps.
Hive Executive Chairman Frank Holmes said he anticipates the company will earn as much as $1.3 million over the next year from this new business segment.
And Applied Digital has partnered with information technology firm Supermicro to build servers that can run AI applications.
CEO Wes Cummins said the computing industry is in the middle of its most dynamic change in decades. He added that Applied Digital will move to help support the next wave of AI-powered apps.
It’s only a matter of time before other bitcoin miners jump in on this emerging opportunity.
The Opportunity Is Clear
Bitcoin’s price movement is a main determinant of the profits miners can earn at any given time.
In fact, based on our pricing models, some bitcoin miners could see gains as high as 875% from current levels should the price of bitcoin reach $120,000 in the next two years.
However, as we’ve seen with Hut 8 Mining, high-performance computing contracts are long term and provide bitcoin miners with stable, recurring revenue.
By adding these computing services, bitcoin miners can protect their revenue stream in environments where bitcoin’s price is falling.
That will help lower the risk of investing in these miners.
For that reason, we think every portfolio should hold bitcoin and bitcoin miners.
So if you’re looking for broad exposure to this trend, consider the Amplify Transformational Data Sharing ETF (BLOK).
It holds some of the largest bitcoin miners… but also includes companies in the broader blockchain ecosystem. So it’s not a pure play on miners.
That being said, there’s an opportunity to earn an even greater return from the GPU shortage.
Last week, Teeka Tiwari held a special strategy session called The #1 Coin for the AI Boom.
It’s all predicated on an event that’s guaranteed to happen on August 23 at 4 p.m. ET that he believes will send the AI trend into a parabolic move higher.
It’s a project that’s solving the main problem for the advancement of AI – the need for more computing power.
And best of all, right now this AI coin trades for around $1. That means you can get in on the ground floor.
Based on our research, this project has at least 100x more upside potential than popular AI stocks at current levels.
Click here to watch a replay of Teeka’s strategy session.
Regards,
Michael Gross
Analyst, Palm Beach Daily