How Michael Novogratz and Galaxy Digital are pivoting towards AI in response to Bitcoin mining challenges

Michael Novogratz, head of Galaxy Digital, is positioning himself among the pioneers of a major transformation in the mining industry. Facing declining profitability, his New York-based company has taken a decisive strategic step: massively shifting its electrical capacity toward high-performance computing (HPC) for artificial intelligence applications. This decision embodies the forced shift that industry players are undergoing, under increasing competitive pressure and shrinking margins.

Significant Energy Capacity Reoriented Toward Computing

Galaxy Digital has signed a non-binding memorandum of understanding with a major American platform specializing in large-scale computing services to convert all 800 megawatts of its energy capacity into HPC infrastructure. To date, the Helios mining site in West Texas is only utilizing 200 MW of the approved 800 MW, while an additional 1.7 gigawatts remains under regulatory review.

This reorientation follows an obvious commercial logic: miners already have operational energy infrastructure that can be quickly redeployed, much more efficient than building a data center from scratch. For AI companies, it’s an opportunity to accelerate their operations in the face of exponential demand for computing power. Michael Novogratz and his team recognize that this transition offers a way out to diversify revenue in a highly competitive market.

The Impact of Bitcoin Halving on Miner Survival

The recent reduction in mining rewards has widened the gap between profitability and viability for the entire sector. Galaxy Digital’s financial data reflect this pressure: mining revenues dropped 23% quarter-over-quarter, despite an 11% increase in total hash rate. Increased mining difficulty and seasonal operational constraints are additional hurdles.

To gauge the severity of the situation, Bitcoin’s price ($68.23K) remains near its all-time highs, but margins for producers have collapsed. Michael Novogratz and his competitors face a binary choice: adapt their business models or accept structural losses.

AI: A Lifeline for the Under Pressure Mining Industry

The move toward HPC infrastructure was initiated by CORE Scientific, one of the sector’s giants, which formed a strategic partnership with CoreWeave, a cloud computing provider. This decision propelled CORE Scientific’s stock upward, immediately attracting investor attention and setting a precedent that peers could not ignore.

Hut 8 and HIVE Blockchain quickly jumped into the fray, reallocating massive resources toward AI computing rather than solely Bitcoin mining. These moves illustrate an inevitable convergence: AI has become an alternative growth engine for a mining industry seeking renewed profitability.

Galaxy Digital Facing Q3 Challenges

Although mining revenues declined, Galaxy Digital improved its overall position in Q3. Net losses narrowed, and operating income increased by over 30%, indicating that diversification efforts are beginning to pay off. The stock surged 7% in Toronto following the announcement, while Bitcoin and broader crypto indices maintained their upward trajectory.

A Promising Strategic Transition

Michael Novogratz is betting on a vision where mining infrastructure becomes a versatile vector of the digital economy. This shift from pure Bitcoin mining to a multi-service approach is not mere opportunism but a fundamental adaptation to market realities. Galaxy Digital’s 800 MW, converted into AI capacity, could redefine operational profitability and strengthen the company’s position in an expanding computational economy.

The future of the mining industry will depend on how well players like Michael Novogratz navigate this transformation. Those who fully embrace the convergence of mining and AI could emerge strengthened from this critical phase. Galaxy Digital exemplifies this new strategic trajectory.