Bitcoin Mining Just Changed FOREVER - Anthropic’s $9.1B AI Bet

Anthropic signed a deal with Riot Platforms valued at 9.1 billion dollars covering a two-gigawatt site capable of powering two million European homes. Coin Shares had visited the Riot site shortly before the announcement and site representatives explicitly stated they would always be mining Bitcoin, making the pivot to AI data centers striking. Around 30 percent of listed Bitcoin miners' revenues currently come from AI, and James Butterfield predicts that figure will rise to 70 to 75 percent by year end based on company announcements, reaching 80 to 90 percent within two years. The return on invested capital for AI is approximately three times higher than for Bitcoin mining on current numbers, which explains the shift.

Bitcoin miners built mega-scale sites over four to five years that are now well suited for AI conversion, and repurposing existing sites avoids the political backlash and permitting challenges associated with building new large AI facilities. AI data centers require four nines uptime, meaning 99.99 percent availability, demanding robust power infrastructure and fast internet connections that miners have already built. Bitcoin's hash rate has fallen approximately 10 percent from its peak, and mining is expected to become more regionalized and decentralized as mega-scale sites shift to AI. Listed miners currently represent only 25 percent of total Bitcoin hash power, and if all US publicly traded miners convert to AI data centers, Bitcoin mining could shift significantly back to China or other regions.

Bitcoin mining targets the cheapest available power, historically around five cents per kilowatt hour in Texas compared to 10 to 15 cents paid by ordinary US consumers. Curtailed power is sometimes negative-priced, and speakers argued it will always have a place for Bitcoin mining because uptime requirements make it unsuitable for AI. There is enough stranded gas emitted globally to power all of South and Central America for a year, and Bitcoin mining can monetize that gas on-site using containerized gas-to-power generators without building pipelines, with converting stranded gas globally through this method estimated to reduce carbon emissions by 63 percent.

A ColdCard hardware wallet exploit was discovered involving a non-random random number generator, leaving approximately 2,500 to 3,000 Bitcoin vulnerable and described as highly sophisticated and likely AI-assisted. Butterfield argued exploits of this kind do not exist on institutional-grade hardware security modules, and some self-custody Bitcoin holders are already shifting to ETF products citing institutional-grade custody. BlackRock lowered the minimum threshold for converting spot Bitcoin holdings into IBIT from 25 million dollars to 1 million dollars while finding a mechanism that avoids triggering a taxable event on conversion. Speakers predicted a mass exodus from cold storage to custody-based solutions and argued custodial Bitcoin will come to represent 85 percent of all holdings.

Bitcoin ETFs saw their largest inflows since April in the most recent week, though price has not yet reflected this. Eight weeks of outflows in May and June totaled 8 billion dollars, proportionally similar to the roughly 8 to 9 percent of assets under management lost in the 2018 outflow event, and speakers characterized the summer 2024 pattern as capitulation and a market low point. Crypto asset inflows have been positive for four consecutive weeks with approximately 1.1 billion dollars flowing in during the most recent week, and a client survey cited in the episode suggests many investors view crypto at current levels as good value.

MVRV, defined as market value divided by realized value where realized value represents the weighted average acquisition cost of Bitcoin, is currently at levels comparable to the 2018 to 2019 and 2022 cycle lows. Speakers described current readings as a compelling long-term entry point but noted price action is expected to remain range-bound before moving higher. Monetary policy is identified as the most probable driver of the next rally, with no rate hikes expected and weak US jobs data expected to gradually reinforce that view. Retail investors are not expected to return to crypto in meaningful size until roughly six months before the next Bitcoin halving, placing that inflection point around October.

Regulatory uncertainty around the Clarity Act is weighing on Ethereum, Solana, and DeFi investment flows but not significantly on Bitcoin. The next Clarity Act vote is scheduled for September 15, which falls in the middle of midterm election campaigning, making passage difficult, though the May floor vote was described as very bipartisan. Stablecoins represent a marginal buyer of government debt, giving both parties incentive to support related legislation, and speakers concluded the Clarity Act will eventually pass but not anytime soon absent extraordinary political circumstances.