Galaxy Digital Shifts Focus To High-Performance Computing Amid Bitcoin Challenges

According to CoinDesk, Galaxy Digital has entered into a non-binding agreement with a U.S.-based hyperscaler firm to transition its entire 800 megawatts of mining capacity to support high-performance computing (HPC). This strategic move comes as the Bitcoin halving event has intensified profit challenges for the company and the broader mining industry. Galaxy Digital currently operates 200 megawatts of its approved 800 megawatts of mining capacity, with an additional 1.7 gigawatts under consideration for potential permitting. The competitive landscape of Bitcoin mining is prompting companies to pivot towards artificial intelligence (AI) computing to mitigate financial losses. Michael Novogratz's Galaxy Digital is the latest to explore this transition. The New York-based firm announced the agreement in its third-quarter earnings report, highlighting the potential conversion of its power capacity to HPC. Hyperscaler firms, known for their large-scale data centers, offer substantial computing power, making them attractive partners for miners seeking diversification. This collaboration allows miners to leverage their existing power capacity more efficiently, while AI firms benefit from rapid deployment capabilities to meet growing demand. Galaxy's Helios mining facility in West Texas boasts 800 megawatts of approved power capacity, with 200 megawatts currently operational. The company is also evaluating 1.7 gigawatts of capacity for potential future use. This shift is subject to due diligence and necessary approvals, aligning with the industry's response to Bitcoin's fourth halving, which has halved mining rewards and increased competition, thereby squeezing profit margins. The trend towards HPC gained momentum after Core Scientific, one of the largest miners, secured a significant deal with cloud-computing firm CoreWeave, resulting in a surge in its stock price. This has led to increased investor pressure on other mining firms to follow suit. Companies like Hut 8 and HIVE are now allocating substantial resources to AI computation, moving beyond solely focusing on Bitcoin mining. Galaxy Digital reported a 23% decline in mining revenue from the previous quarter, despite an 11% increase in total hashrate or mining power. This decline is attributed to the halving, increased mining difficulty, and seasonal operational curtailments. The shift towards high-performance computing represents a strategic adaptation to the evolving challenges within the cryptocurrency mining sector.