As the crypto winter marches on, Bitcoin has now plummeted nearly 28% this year. This has been particularly difficult for companies like Bitcoin miners that are valued based on their Bitcoin holdings.

Luckily, however, Bitcoin mining is made possible through powerful data centers that use high-speed computers to solve cryptographic puzzles to earn and mine new Bitcoins. Data centers are also fueling the artificial intelligence (AI) revolution.

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As crypto continues to struggle, some Bitcoin mining companies have retrofitted their facilities to power AI. Riot Platforms (NASDAQ: RIOT) just entered into a $9 billion agreement to provide AI compute to Anthropic. Here's why AI is key to valuing crypto-mining companies.

Making the conversion comes with rewards

Crypto mining facilities have several key advantages when it comes to becoming an AI data center. For one, they already have a significant head start: They have secured land for a data center, are connected to the power grid, and are up and running. New data centers have received significant pushback from the public due to environmental issues and the threat AI could pose to humanity.

Still, making the transition is not necessarily easy. The hardware used by Bitcoin miners does not work for AI, so these miners need to secure graphics processing units (GPUs) from companies like Nvidia, as well as different fans to keep the chips cool.

Given that the software and infrastructure needs differ, this may also require new personnel to operate effectively. Power consumption and its management also differ for AI, and Bitcoin mining companies may need new permits to operate an AI data center.

But for those that successfully make the transition, the rewards can be immense.

Riot's $9.1 billion deal with Anthropic is for an initial 20-year term at its Rockdale, Texas, campus. There are also two five-year extensions at Anthropic's option, which could translate into an additional $7 billion of revenue.

This follows an earlier deal this year in which Riot agreed to lease 25 megawatts (MW) of compute capacity to Advanced Micro Devices, with the potential to expand to 200 MW of critical IT load capacity. Riot's deal with Anthropic is for 191 MW of capacity.

The company generated only about $23 million in revenue from its data center division in the second quarter, but you can see how that's going to ramp up quickly: $9 billion over 20 years, split evenly, is about $450 million per year. Riot had roughly $174 million of total revenue in the second quarter.