Bitcoin miners' move into AI is creating a new market for trading computing power

Luxor Technology secured $16 million to expand its business into AI hardware and computing-power trading.

This move is driven by bitcoin mining companies increasingly shifting focus toward artificial intelligence (AI).

By the end of March, publicly traded bitcoin miners had entered into over $70 billion in contracts for AI and high-performance computing, according to CoinShares.

Luxor determined that most mining sites it assessed possess sufficient electricity and fiber connections for AI workloads, although they would necessitate new data centers.

The Seattle-based firm announced on Tuesday that the $16 million round was led by CMT Digital, with investment also coming from equipment makers Canaan and MicroBT.

The capital will support Luxor's AI hardware brokerage and computing-power trading operations.

Ethan Vera, Luxor's chief operating officer, stated that its software business interacts with bitcoin miners representing nearly two gigawatts of power capacity.

Luxor is also building contracts allowing buyers and sellers to agree on future computing prices, similar to how miners use financial contracts to manage revenue fluctuations.

Sam Hallene, a partner at CMT Digital, noted that AI companies seek protection from price volatility, including the potential for expensive computing gear to maintain utility longer than anticipated.

Luxor already provides privately negotiated contracts for computing rental prices, while Vera pointed out that transparency remains an issue, especially regarding AI hardware costs.