Key Points
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Many crypto firms have rebranded themselves as AI infrastructure providers.
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That trend makes financial sense, but it isn’t a “zero-sum” game between crypto and AI.
Over the past few years, many cryptocurrency mining companies have reinvented themselves as artificial intelligence (AI) infrastructure companies. Instead of using their powerful computer chips solely to mine tokens, which were subject to unpredictable price swings, they monetized that cloud-based computing power by remotely processing machine learning and AI tasks.
These “neocloud” companies include Hut 8(NASDAQ: HUT) and IREN(NASDAQ: IREN), which both mined Bitcoin(CRYPTO: BTC) before evolving into AI infrastructure companies; and CoreWeave(NASDAQ: CRWV), which mined Ethereum(CRYPTO: ETH) before it rebranded itself as an AI infrastructure provider and repurposed its GPUs to process AI tasks.
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It’s easy to see why these companies took that leap, as it enabled them to address the booming AI market’s insatiable demand for computing power while reducing their dependence on volatile cryptocurrencies. However, Coinbase(NASDAQ: COIN) CEO Brian Armstrong recently tweeted on X that the strategy represented the “wrong way to think of the world” and the balance between crypto and AI wasn’t a “zero-sum” game. Let’s see why that argument might be wrong — and what it means for investors who are dabbling in both markets.
Why does Armstrong think crypto complements the AI market?
Armstrong believes the growth of the AI market actually “makes crypto more important” because AI agents “will need their own financial infrastructure” to “transact far more per day than all humans combined.” Since those agents can’t open bank accounts or wait for wire transfers, they need to accept “real-time programmable money” like cryptocurrencies.
It might seem odd for AI agents to need their own money. Still, they must provision their own resources (paying for other on-demand services to complete their workflows) without any human intervention to become fully autonomous. In other words, AI agents will be paying each other rather than people to achieve their goals, and that won’t work through traditional banks.
Therefore, cryptocurrencies will become a foundational layer of the AI market — in the same way cloud infrastructure platforms became the foundation of mobile apps. That’s why Armstrong argues that there’s no need for crypto firms to hastily reinvent themselves as AI companies, simply because the crypto market is cooling and the AI market is booming.
Why doesn’t that argument make financial sense?
Armstrong’s argument is logical, but it doesn’t make financial sense for crypto companies to keep mining cryptocurrencies like Bitcoin — which are becoming increasingly difficult to mine profitably — when they can monetize their GPUs and application-specific integrated circuits (ASICs) for AI tasks to generate more predictable revenue. Moreover, developer-oriented blockchains like Ethereum will continue to expand without dedicated crypto companies.
Therefore, Armstrong is right that it isn’t a “zero-sum” game between crypto and AI. But it doesn’t make sense for crypto firms to stop pivoting toward the AI infrastructure market.
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Leo Sun has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin and Ethereum. The Motley Fool recommends Coinbase Global. The Motley Fool has a disclosure policy.
