Cryptocurrencies focused on artificial intelligence have continued their downward trajectory after Microsoft announced a slowdown in its data center expansion plans.
The Bittensor (TAO) token plummeted by 10% over the past 24 hours, and 24% for the week. In a similar vein, Render Token (RNDR) also fell by 10% and 20% during this timeframe, while Grass (GRASS) saw a dramatic 20% drop. The collective market capitalization of all AI tokens monitored by CoinGecko has decreased by 10% in the last day.
This decline has mirrored the performance of many AI-related stocks. NVIDIA, the leading firm in the AI sector, has dropped over 30% from its peak in 2024. AMD, which ranks second in market share for AI chips, has reduced to $98, a 47% drop from its highs this year. Other companies, such as C3.ai and SoundHound, have also seen significant losses.
The decline in AI tokens aligns with the recent trends in Bitcoin (BTC) and various altcoins following Donald Trump’s Liberation Day address.
Bittensor, Grass, Render plunge as Microsoft pauses data center expansion
The tokens also fell after it was reported that Microsoft would be suspending or delaying data center projects in the UK, US, Australia, and Indonesia.
This development signals that the AI sector may not be growing at the pace some experts had predicted. This is particularly striking considering Microsoft’s significant role in the commercialization of AI through its collaboration with OpenAI, the organization behind ChatGPT.
As one of the world’s largest operators of data centers, Microsoft invests over $74 billion each year in data infrastructure. Analysts at TD Cowen recently cautioned about a potential oversupply of data centers in relation to current demand.
The surge in AI interest has attracted many developers from the crypto space. Bittensor, a leading initiative, provides a decentralized platform for AI learning models; miners contribute computing power and earn TAO, its native token.
Render operates on Solana (SOL) and offers a decentralized market where users can lease GPU power to developers. In contrast, Grass enables users to earn tokens just by installing an application on their computers, helping companies monetize passive data collection.
AI meme coins have also faced declines as the excitement faded. Tokens within the Virtuals Protocol ecosystem, including GAME, Luna, aixbt, and Iona, have collectively lost hundreds of millions in market value. For instance, GAME’s market cap has plummeted from $350 million in January to just $13 million today.