Markets
Crypto Miners Get AI Boost; Billionaires Talk Bitcoin on X
This is a republished version of our weekly Forbes Crypto Confidential newsletter. You can sign up to receive Crypto Confidential in your inbox as soon as it is published. here.
AI needs bitcoin miners.
Getty Images
Bitcoin Miners Have the Power AI Companies Covet
Bitcoin miners have what AI providers need: powerA number of long-suffering mining companies now find themselves with the opportunity to sell data center services to high-spending AI customers through their access to electricity.
Many miners have expanded their operations to take advantage of cheap commercial electricity in places like Texas and North Dakota. AI providers need a lot of power — a ChatGPT query uses 10 times more energy than a Google search — and 14 publicly traded U.S. miners can save about 3.6 gigawatts of the 5 gigawatts they currently control, a JPMorgan report says. Miners also have another 4.5 gigawatts in contracts for power plants that are under development. Having enough power is vital considering that building the high-performance computing (HPC) data centers that AI needs from scratch typically takes three to five years, with wait times for grid connections of up to six years, according to the Lawrence Berkeley National Laboratory research center.
These 14 bitcoin miners saw their aggregate market value climb 32.5% in the month through July 3, in stark contrast to bitcoin’s 13.5% decline and the S&P 500’s mere 4.9% gain. It’s not exactly smooth sailing; HPC equipment has stricter cooling and clean air standards, but smaller AI players may not need to be as demanding as their larger competitors, and a concept is being developed that would focus on HPC and mine bitcoin only when there is excess power capacity.
While some bitcoin miners, among them Riot (RIOT), CleanSpark (CLSK) And Marathon Digital Holding (MARA)—stick to the pure-play path, competitors including Basic Scientific Center (CORZ), Iris Energy (IREN) And Applied to digital (APLD) AI companies are working to add HPC technology. “The truth is that AI companies can pay more for this power because they don’t care,” says Kevin Dede, an analyst at HC Wainwright. “Their business model is more robust. With bitcoin mining, you have no idea what the price of bitcoin is or how hard it is to mine one, so you’re taking on a lot more risk.”
Full Story: Why These Bitcoin Miners Are Becoming the Hottest AI Stocks of the Summer
IRS Implements Cryptocurrency Reporting Rules to Combat Tax Evasion
The US Treasury will require Most cryptocurrency brokers must disclose information about users’ transactions starting in 2026 for trades executed in the previous year, a requirement introduced ensure that “digital assets are not used to hide taxable income.” The department’s Internal Revenue Service said this is not a new tax—cryptocurrency investors were still supposed to pay taxes on profits from cryptocurrency transactions—but the statement is meant to make it easier to link traders to wallet addresses. For traders who do pay their taxes, the forms will simplify reporting, putting it on par with conventional securities. There is a new form for the report, the 1099-DA, and the IRS is sticking with a draft released last year.
Decentralized exchanges, which are fully automated and never take possession of the cryptocurrencies being traded, are currently exempt from the reporting requirement, though the Treasury may add them in the future. Also exempt until further guidance is given are several categories of transactions:
• Wrapping and unwrapping transactions
• Liquidity Provider Transactions
• Staking Transactions
• Transactions described by digital asset market participants as digital asset loans
• Transactions described by digital asset market participants as short sales of digital assets
• Contracts in notional principal (swaps)
The main rules were published as Notice 2024-56 and the exemptions are Notice 2024-57. Learn more about the regulations here.
Sources: Forbes Digital Assets, CoinGeckoRates effective as of 4:00 p.m. on July 3, 2024.
Billionaires Dell, Musk, and Saylor Post About Bitcoin
Michael Dell has been Sprinkle X (formerly Twitter) with messages about bitcoin, which could be a harbinger of the transformation of the computer maker he founded into a leading cryptocurrency store. Or maybe he just has too much time on his hands. “Scarcity creates value,” he posted on June 20. Later that day Michael Saylorwhose MicroStrategy is based on a treasure trove of 226,331 bitcoins worth over $13 billion, replied “Bitcoin is digital scarcity,” then Dell republished this answer. One can debate the veracity of either of these statements, but they seem to draw attention to each other.
On June 28, Dell released a poll titled “The Most Important Thing.” Bitcoin came in first with 43.1% of the 64,035 votes cast, followed by love and relationships with 39.2% and AI with 9.3%, which may say more about the type of people who read Dell’s publications than it does about what’s important. One of those readers is Elon MuskX owner and Tesla founder, owner of Bitcoin, who replied: “Sentimental fool that I am, I pressed ‘Love and Relationships’.”
Somewhere else
SEC v. Binance: Court rules that BNB sales are cryptocurrencies, not securities. Cointelegraph
Crypto Takes Its Fight Against the SEC Directly to Biden and Trump, CNBC
Sony prepares to launch cryptocurrency exchange in Japan with acquisition of Amber Platform, The block