Bitwise: $20 trillion market, long-term opportunities for AI+Crypto

Written by: Juan Leon, Bitwise Cryptocurrency Analyst

Compiled by: Luffy, Foresight News

I recently attended Consensus in Austin, one of the largest cryptocurrency conferences in the world. At the 15,000-plus attendee event, countless industry experts discussed a wide range of topics, from tokenization and regulation to monetary policy and Bitcoin ETFs.

But if I had to point to the biggest takeaway from the conference, it would be this: The intersection of artificial intelligence (AI) and cryptocurrency is more promising than people think. By 2030, these two industries could contribute $20 trillion to global GDP.

It won’t happen overnight, but we’re already seeing the beginnings of its huge potential.

Bitcoin Mining and Artificial Intelligence: An Emerging Partnership

You’ve no doubt heard about the recent AI boom, which has propelled Nvidia (the world’s largest producer of AI chips) to a market value of more than $3 trillion. That makes the chipmaker the world’s second-largest public Unternehmen. But less well known is the impact the AI boom is having on data centers, which store the ever-increasing amounts of information that fuel AI.

It’s true: The race for AI supremacy has led to an unprecedented shortage of data centers, AI chips, and power supplies. The world’s four largest cloud computing companies (Amazon, Google, Meta, Microsoft) are expected to spend nearly $200 billion on building data centers by 2025, largely to meet the growing demand for AI. But new facilities are in short supply: About 83% of data center capacity under construction has been pre-leased, with AI companies and cloud service providers the main source of demand, according to a March report from commercial real estate firm CBRE Group. Data centers simply can’t keep up with the AI craze.

This is where Bitcoin miners come in.

Bitcoin miners’ sole purpose is to process and store vast amounts of data. In other words, they have the resources that AI companies desperately need: powerful chips, state-of-the-art cooling systems, and supporting infrastructure.

Last week, AI cloud provider CoreWeave offered to buy bitcoin miner Core Scientific for $1.6 billion, a 55% premium to its market price (Core Scientific later rejected the offer). Then this week, Core Scientific announced its most significant miner-AI partnership to date: a $3.5 billion deal for Core Scientific to host CoreWeave’s AI-related services in its data centers for the next 12 years.

Core Scientific isn’t the only company to do this; Hut 8, Iris Energy and other mining companies have announced similar AI hosting plans in recent months.

Of course, this bodes well for miners, whose operations are likely to benefit from new revenue streams and an engaged customer base. But it also provides critical support to the larger bitcoin ecosystem, which relies on these miners to process transactions and secure the network.

Beyond Bitcoin Mining: Long-Term Opportunities in AI and Cryptocurrencies

In the long term, cryptocurrencies and AI may intersect in other areas worth watching.

One is information verification. While programs like ChatGPT have gone viral (the app attracted about 100 million monthly active users in just two months), they have also sparked controversy and raised new questions. Who controls AI-generated content? How transparent should that content be? To what extent does AI reflect or reinforce bias? With deepfakes so prevalent, how can users verify the authenticity of media? (On this last point, the World Economic Forum recently said that a “surge in false information” caused by AI is the biggest immediate risk to the global economy.)

So what does all this have to do with cryptocurrency? Recall that the public blockchains that underpin cryptocurrencies are available to anyone and are not controlled by centralized entities. Creative entrepreneurs are finding ways to use this technology to combat potential misuse of AI.

Case in point: We schrieb about a startup called Attestiv in March that creates a digital “fingerprint” for videos based on their metadata (e.g., when and where they were recorded). It then stores that fingerprint on a public blockchain. If a video has been tampered with, any platform viewing it can check it against the original fingerprint and let the viewer know that it has been tampered with. In theory, we can see potential for similar verification methods in areas such as original research, official government communications, and more. That’s why many experts are certain that blockchain will play a key role in checks and balances on AI.

Another area where cryptocurrency and AI may come together is in virtual assistants. Today, bots like Apple’s Siri or Amazon’s Alexa can do everything from buying airline tickets to booking appointments, and advances in AI are making these tools more versatile. But this versatility will be limited in the future if these agents can’t perform more complex tasks quickly and efficiently. Combining AI assistants with smart contracts and digital native currencies like Bitcoin or stablecoins (currencies that flow securely without the control of a centralized entity) could open up new avenues to further increase our productivity.

Diese Entwicklungs lead me to believe that the convergence of AI and cryptocurrency will leverage the strengths of their respective fields to reshape the way we innovate and interact with the world.

PwC predicts that AI and cryptocurrency will contribute $15.7 trillion and $1.8 trillion to the global economy, respectively, by 2030. While the two figures add up to $17.5 trillion, their synergy could push the total value to $20 trillion or even higher if they compound.

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