Mike Novogratz and Galaxy Digital: How AI is Redefining Bitcoin Miners' Strategies

Mining revenues become unsustainable. Faced with Bitcoin’s halving and rising mining difficulty, Mike Novogratz and Galaxy Digital are exploring a new path: transforming their massive energy capacity into computing infrastructure for artificial intelligence. The strategy reveals a harsh reality in the sector: miners must evolve or perish.

Massive Reconversion: 800 Megawatts Reoriented for AI Computing

Galaxy Digital has taken a major step by signing a letter of intent with a prestigious American hyperscaler. The agreement could convert all of its available energy capacity—800 megawatts—into hosting for high-performance servers (HPC). The Helios mining site, located in West Texas, currently operates 200 MW, with an additional 1.7 gigawatts in permitting.

This reconversion follows an undeniable economic logic: miners already own the energy infrastructure, which is more costly and complex for AI companies to build. By selling this capacity, Galaxy gains revenue diversification while hyperscalers accelerate deployment without building new data centers.

Why Bitcoin Halving Creates Urgency

Bitcoin’s fourth halving event cut mining rewards in half, intensifying fierce competition. Galaxy Digital reported a 23% drop in mining revenue in Q3 2024, despite an 11% increase in total hash rate. Mining difficulty exceeding 100 trillion signals a harsh reality: only ultra-capitalized miners with optimized energy costs will survive by focusing solely on extraction.

Bitcoin, currently trading at $67,860, no longer justifies massive infrastructure investments. Margins are shrinking, forcing a strategic reorientation.

The CORE Scientific Precedent: When HPC Becomes Essential

CORE Scientific pioneered this shift by signing a colossal contract with CoreWeave, a cloud computing platform specializing in AI. This decision sparked a wave of imitation: Hut 8 and Hive Blockchain are now dedicating substantial resources to AI computing infrastructure rather than focusing solely on mining.

CORE Scientific’s agreement caused a spectacular rise in its stock price, signaling to investors that diversification into AI adds value. Galaxy Digital is following this proven trajectory.

Galaxy’s Financial Results: A Mixed Improvement

The financial picture shows nuances. Although mining revenues declined by 23%, Galaxy Digital reduced its net loss for the quarter and increased its operating revenue by over 30%. The stock jumped 7% upon the results announcement in Toronto.

This improvement suggests investors value strategic diversification over increased dependence on mining. Mike Novogratz anticipated this dynamic: transitioning to AI is not a gamble, but a survival adaptation.

The Broader Question: Ore or Infrastructure?

The industry remains divided on whether miners should consolidate their market share in mining or fully shift to AI infrastructure. Galaxy Digital seems to have made a choice: an implicit recognition that energy is becoming more valuable as raw computing resource than as a mining input.

This reorientation redefines the mining industry. Tomorrow, former miners could be classified as providers of critical infrastructure for the expanding AI ecosystem. Under Novogratz’s leadership, Galaxy Digital positions itself at the heart of this transformation.