The Bitcoin mining sector in Brazil is facing one of the worst crises in its history.30% and 40% of Brazilian minersAccording to preliminary data from industry associations, the situation is so serious that many are migrating to other areas, such as artificial intelligence (AI), in an attempt to keep their operations economically viable.
The end of a cycle: falling profits and rising costs
All over the world, miners are abandoning their operations due to the combination of factors such as theReduce the Bitcoin Reward by Half(halving) in April 2024, the rise in energy costs and the fall in the price of the cryptocurrency. In May, the price of Bitcoin came down to $56,000, a level well below that recorded in 2021, when it exceeded $69,000.
In Brazil, the situation is aggravated by the rising cost of electricity, which represents60% of operating costsAccording to the National Energy Agency (Aneel), the average value of the residential rate in the country has risen12.5% by 2023, while the industrial tariff, which hits many miners, also showed a significant increase.With the decline in profitability, many miners are operating in the loss.
Data fromBitcoin Mining CouncilThe net profit margin of the global sector has declined.20% in 2021 to less than 5% in 2024In Brazil, the situation is even more critical due to the seasonality of rains, which directly affects the energy costs of the hydroelectric plants, the country’s main energy matrix.
Migration to AI: the table of salvation?
In the face of the collapse of profits from mining, many Brazilian miners are looking for alternatives to reuse their equipment.BitfarmsOne of the largest miners in Brazil, has already announced that they are allocating part of their computing capacity to training AI models.Core ScientificThey had already made the transition in 2023 in an effort to diversify their sources of income.
According to experts, Bitcoin mining and AI training share one key feature:Both require high computing power and energy consumption.Equipment such as ASICs (mining specialized chips) can be adapted to run AI tasks, such as processing large volumes of data and algorithm training.HashdexIn addition, the company, which operates both in mining and AI solutions, an increase in40% on demand for your AI servicesin the last six months.
However, the transition is not easy. According to computer engineer João Silva of the University of São Paulo (USP),“Mining equipment is not optimized for AI, which can reduce its efficiency by up to 30 percent.”Nevertheless, migration has been seen as a way to keep operations active while the cryptocurrency market is not recovering.
Impact on the Brazilian market and prospects
The crisis in Bitcoin mining in Brazil has reflected on several fronts.BitmainThey are already falling from25% in salesSecond, in the real estate market: miners are putting their facilities for sale or renting part of the space to other companies, including AI data centers.
In addition, the crisis may affect the adoption of Bitcoin in Brazil.The country is one of the largest cryptocurrency markets in Latin America, with a daily trading volume that exceedsR$ 2 billionAccording to data fromCoinGeckoIf local mining continues to decline, Brazil may lose relevance in the global Bitcoin scenario, increasingly relying on miners from other countries, such as the United States and Canada, where energy costs are lower.
On the other hand, the transition to AI can bring indirect benefits.Diversification of operations can make the sector more resilient to future crises.In addition, Brazil has the potential to become an AI hub in Latin America, thanks to its renewable energy matrix and skilled workforce.AbsolutelyThe Brazilian Solar Energy Association has the capacity to10 GW of solar energy by 2025which could be exploited by AI and mining undertakings.
What to expect for the future?
The recovery of Bitcoin mining in Brazil depends on several factors.The first is the quotation of the cryptocurrency: if Bitcoin again exceeds the mark of$70 thousandThe second is the cost of energy: if tariffs continue to rise, mining can become impossible for many players.
For experts such as the economist Ana Luiza of the Getúlio Vargas Foundation (FGV),“Brazil has the potential to excel in the AI sector, but needs to invest in public policies that encourage innovation and energy transition.”Meanwhile, Brazilian miners continue to look for alternatives to survive the difficult time.
As long as the market does not recover, one thing is certain: Bitcoin mining in Brazil will never be the same again.