Original Title: Bitcoin miners are becoming AI companies and selling their BTC to fund the transition

Original Author: Shaurya Malwa, CoinDesk

Original Compilation: Deep Tide TechFlow

Deep Tide Intro: CoinShares’ latest mining report shows that the weighted average cost of producing one Bitcoin for listed miners has risen to about $80,000, while BTC’s current price is $68,000–$70,000—meaning these miners are losing about $19,000 per Bitcoin mined. The following is the original article content:

The industry is undergoing the most fundamental shift since its inception: more than $70 billion worth of AI/HPC contracts have already been signed, listed mining companies have cumulatively sold off more than 15,000 BTC, and companies such as IREN and TeraWulf are carrying several billion dollars in debt. By the end of 2026, the share of AI revenue for some miners could reach 70%. They are evolving from Bitcoin miners into data center operators that just happen to keep mining. The core contradiction is this: the companies that sell coins to transition to AI are precisely those that safeguard the security of the Bitcoin network, while hash power has fallen from its peak of 1,160 EH/s to about 920 EH/s.

· The Bitcoin mining industry is going through the most fundamental transition since it began; the clearest signal is not hash power or difficulty adjustment, but the balance sheet.

· CoinShares’ mining report for 2026 Q1 released this week shows that the weighted average cash cost for listed miners to mine one Bitcoin rose to about $79,995 in 2025 Q4.

· Bitcoin has been trading in the $68,000–$70,000 range, and CoinDesk’s report last week estimated a loss of about $19,000 per Bitcoin mined.

· This figure is unsustainable, and the industry knows it. The response is a comprehensive pivot to AI infrastructure—which is reshaping the very nature of these companies.

According to the CoinShares report, listed mining companies have already announced more than $70 billion in AI and high-performance computing (HPC) contracts. CoreWeave and Core Scientific’s expanded agreement is worth $10.2 billion over 12 years. TeraWulf has signed $12.8 billion in HPC contract revenue. Hut 8 signed a $7.0 billion, 15-year AI infrastructure lease in the River Bend campus. Cipher Digital and Fluidstack, backed by Google, signed a deal worth several billion dollars.

By the end of 2026, the share of AI revenue for listed miners could be as high as 70%, up from about 30% currently. Core Scientific’s AI hosting revenue accounts for 39% of total revenue. TeraWulf is 27%. IREN is currently 9%, but is expanding rapidly; its under-construction liquid-cooled GPU capacity reaches 200 megawatts.

This means these mining companies are becoming increasingly like data center operators—only they’re still mining Bitcoin.

The economics explain why. CoinShares data shows that the cost of Bitcoin mining infrastructure is roughly $0.7–$1.0 million per megawatt, while AI infrastructure is about $8.0–$15.0 million per megawatt. The gap is huge, but AI offers structurally higher and more stable returns.

Hash price—a metric measuring miners’ revenue per unit of hash power—fell in early March to a historical low after the halving, at about $28–$30 per PH per day.

At this level, miners using mid-generation rigs need an electricity price below $0.05 per kilowatt-hour to sustain cash profitability. Meanwhile, the profit margins promised by AI infrastructure contracts exceed 85%, with revenue protection visible for multiple years.

Where the transition money comes from

CoinShares’ report points out that there are two funding sources for this transition, both clearly visible in the data.

First, borrowing. Leverage across the entire industry has undergone a qualitative change. IREN now carries $3.7 billion in convertible notes, in five series. TeraWulf has total debt of $5.7 billion, made up of convertible notes and senior secured notes of its hash-rate subsidiaries.

In November, Cipher Digital issued $1.7 billion in senior secured notes, causing its quarterly interest expense to jump from $3.2 million over the first nine months to $33.4 million in just Q4 alone. This is not a mining-level debt burden—it’s an infrastructure-level bet—betting that AI revenue will arrive quickly enough to cover debt obligations.

Second, selling BTC. Listed mining companies have cumulatively reduced holdings by more than 15,000 BTC from their peak levels. In January, Core Scientific sold about 1,900 BTC (worth $175 million) and plans to clear nearly all remaining positions in 2026 Q1. Bitdeer will have zeroed out its holdings in February. Riot Platforms sold 1,818 BTC in December (worth $162 million).

Even Marathon, the largest publicly listed BTC holder (holding 53,822 BTC), quietly expanded its policy in its March 10-K filing, authorizing sales from reserves across the entire balance sheet. Part of the reason is pressure from its $350 million Bitcoin-backed credit facility— as prices fall toward $68,000, the loan-to-value (LTV) has risen to 87%.

Who protects the Bitcoin network?

Those that sell BTC to fund AI are, precisely, the companies that operate mining in a way that safeguards the security of the Bitcoin network. This creates the core contradiction behind this transition. When mining doesn’t pay but AI does, the rational economic decision is to move funds out of mining. But if enough miners do this, the network’s security budget shrinks.

The hash power data already reflects this. Network hash power hit a peak of about 1,160 EH/s in early October 2025, then fell to about 920 EH/s afterward, with three consecutive negative difficulty adjustments— the first time since July 2022.

Valuation divergence

The market has priced in this divergence. Mining companies with signed HPC contracts are currently trading at 12.3x next 12 months’ revenue. Pure-play mining companies trade at only 5.9x. The market is paying more than a twofold premium for AI exposure, further reinforcing the incentive to transition.

The geographic landscape is changing too. The U.S., China, and Russia currently control about 68% of the world’s hash power. In just Q4, the U.S. added about 2 percentage points of market share. But emerging markets are also getting involved— Paraguay and Ethiopia have entered the global top ten mining countries, driven respectively by HIVE’s 300-megawatt facility and Bitdeer’s 40-megawatt facility.

Hash power forecast

CoinShares forecasts that network hash power will reach 1.8 ZH/s by the end of 2026, and 2 ZH/s by late March 2027 (one month later than the prior forecast).

But this forecast assumes Bitcoin returns to $100,000 by year-end. If the price stays below $80,000, CoinShares’ pre-calculated hash price will continue to fall, hash power will drop further, and more miners will exit. Staying below $70,000 for an extended period could trigger large-scale capitulation-style clean-out—ironically, that would actually benefit the survivors by lowering difficulty.

New-generation hardware may offer a potential way out. Bitmain’s S23 series and Bitdeer’s self-developed SEALMINER A3 both have energy efficiency below 10 joules/TH, and are expected to ship in large volumes in the first half of 2026. Compared with today’s mainstream mid-generation models, these miners could cut the energy cost per Bitcoin by roughly half. But deploying them requires capital—and many miners are putting their money into AI.

At the beginning of this cycle, the Bitcoin mining industry was a group of companies that protected the network and hoarded Bitcoin. It is exiting this cycle under another identity: a group of companies building AI data centers and selling Bitcoin to finance them.

Is this just a temporary reaction to an unfavorable economic environment, or a permanent structural shift? It depends on one variable: Bitcoin’s price. If it returns to $100,000, mining profits recover and the pace of AI transition slows. If it stalls at $70,000 or lower, the transition accelerates, and the mining-centric industry of the past decade will continue to disappear into something completely different.

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