tl;dr
The article discusses the impact of China's DeepSeek AI model on BTC miners, causing stock plunges and uncertainty. It also addresses the potential for AI to replace traditional mining methods and the entry of major entities like Alibaba and Russian and Brazilian firms into the mining industry. Addi...
BTC Miners on Uncertain Footing After DeepSeek AI Launch BTC Miners on Uncertain Footing After DeepSeek AI Launch
By Steven Stradbrooke
Block reward miners who ‘pivoted to AI’ may be pivoting toward disaster after China’s new AI model claimed to produce better results without the need for huge data center infrastructure.
Riot pressured by new investors to accelerate AI pivot
BRICS corporate giants mull mining gains
DCG, Grayscale unveil new mining options
The cure is obvious, but you’ll find it worse than the disease
Earlier this week, shares in publicly traded mining operators plunged by as much as 30% following reports about DeepSeek, a new China-based open-source AI model that claimed to have achieved more accurate results at a cheaper price than popular Western models like OpenAI’s ChatGPT, Alphabet’s Gemini, and Meta’s Llama. DeepSeek also claimed that its model was trained in a far shorter period than those other models.
Not everyone’s buying what DeepSeek’s selling, as Liang appears to have ‘stockpiled’ thousands of Nvidia’s top-line A100 chips before the export controls were imposed and may have acquired even more via indirect methods. Regardless, DeepSeek’s debut caused the single greatest loss in Nasdaq history, as Nvidia’s market cap lost nearly $600 billion in a single day. The bad news may only be getting started, as Chinese tech giant Alibaba announced the release of its own AI model (Qwen2.5-Max) on January 28, outperforming both Western and DeepSeek’s V3 model.
All this geopolitical one-upmanship caused tech broligarchs like Andreessen Horowitz co-founder Marc Andreessen to declare that this was “AI’s Sputnik moment,” referencing a different Communist country (Russia) beating America in the race to launch an object into orbit in 1957. Pleas for more corporate welfare are almost certainly to follow, lest those Godless commies keep embarrassing ‘Murica on the global stage.
While the Wall Street bleeding may have abated, the share prices of miners such as Core Scientific, Riot Platforms, Cipher Mining, CleanSpark, and others have yet to recover their pre-DeepSeek heights. Many of the impacted miners were among those who’d most loudly proclaimed their intentions to switch to providing infrastructure for AI data centers.
All these cockups led to Silbert’s ouster as chairman of DCG subsidiary Grayscale Investments, the issuer of the GBTC trust that converted to an exchange-traded fund (ETF) last year. On January 30, Grayscale announced a new ETF that offers investors “exposure to miners and the mining ecosystem.” This new ETF (NASDAQ: MNRS) is based on the collective performance of miners including MARA, Riot, Cleanspark, Core, and Iris Energy, with the head of ETFs stating that miners are “well-positioned for significant growth as adoption and usage increases, making MNRS an appealing option for a diverse range of investors.”
When you include the price of constantly upgrading mining rigs because the miner down the road has the new faster rigs with tailfins and rally stripes, few miners are truly profitable. The publicly traded ones also suffer from the need to dispense lavish ‘incentives’ to their senior execs, lest these geniuses up sticks and take their mediocre talents to your competitors. But fear not, BTC miners! Fidelity Digital Assets issued a report earlier this month that contains the secret sauce that will sustain mining for as long as this planet continues to exist.
We’ll wait patiently while the queue of altruistic entities forms.