The Life-and-Death Transformation of Bitcoin Mining Companies: Selling BTC to Blood-Infuse AI — What's Next for the Hashrate Defense Battle

Author: Shaurya Malwa, Co-Head of the CoinDesk Token & Data Asia team; Translation: xz@Gold Finance

Key information to know:

• Public bitcoin mining companies are facing an unsustainable economic model—producing one bitcoin costs roughly $190,000 in losses—so they are rapidly pivoting to artificial intelligence and high-performance computing infrastructure.

• Mining firms have signed more than $70 billion in AI and high-performance computing contracts. By the end of 2026, some miners expect 70% of their revenue to come from AI business—effectively transforming into a business model centered on operating data centers, with bitcoin mining as a secondary activity.

• This shift is funded through heavy borrowing and large-scale selling of bitcoin, which has led to declining network hash rate and mounting pressure on network security—meaning the future of the entire industry depends on whether the bitcoin price can rebound to around $100,000.

The bitcoin mining industry is undergoing the most fundamental transformation in its history, and****the clearest sign is not hash rate or difficulty adjustments—it’s the companies’ balance sheets.

CoinShares’ “Q1 2026 Mining Report,” published this week, shows that in Q4 2025, the weighted average cash cost for listed miners to produce one bitcoin has risen to roughly $79,995.

Bitcoin is trading in the $68,000 to $70,000 range, while CoinDesk’s report last week estimated that miners lose about $19,000 for each BTC they mine.

These figures are not sustainable, and the industry knows it well. The response is that the entire industry is fully shifting toward AI infrastructure—and that is redefining what these companies are truly about.

According to the CoinShares report, the cumulative dollar value of announced AI and high-performance computing contracts across the listed miners universe now exceeds $70 billion. Just the expanded collaboration deals between CoreWeave and Core Scientific are worth $10.2 billion over a 12-year period. TeraWulf’s signed HPC contract revenues total $12.8 billion. Hut 8 has signed a 15-year, $7.0 billion AI infrastructure leasing agreement for its River Bend campus. Cipher Digital and Fluidstack—invested in by Google—have reached multi-billion-dollar collaboration agreements.

By the end of 2026, listed miners are expected to derive as much as 70% of their revenue from AI business, whereas the current figure is around 30%. Core Scientific’s AI hosting revenue accounts for 39% of its total revenue; TeraWulf’s is 27%; IREN’s is 9% and rapidly expanding—its under-construction liquid-cooled GPU capacity can reach up to 200 megawatts.

That means these mining companies are increasingly turning into data center operators, while bitcoin mining is gradually becoming a supporting line of business.

The economics explain why. Based on CoinShares analysis, the per-megawatt cost of bitcoin mining infrastructure is roughly $700,000 to $1.0 million, while the per-megawatt cost of AI infrastructure is $8.0 million to $15.0 million—an enormous gap. But AI business can deliver structurally higher and more stable returns.

The metric that determines miners’ unit revenue—hash rate price—fell to a historical low in early March following the halving, at about $28 to $30 per day per petahash. At that level, miners using prior-generation hardware need to keep electricity costs below $0.05 per kWh to sustain cash profits. Meanwhile, AI infrastructure contracts can offer profit margins of 85% or higher and provide visible revenue for years.

Financial operating mechanisms

The report says this transition is primarily financed in two ways, and the relevant data is clear and trackable.

First is debt financing. The industry’s overall leverage structure has undergone a fundamental change. IREN currently has $3.7 billion issued across five series of convertible notes. TeraWulf’s total debt is $5.7 billion, split at the level of its computing business into convertible notes and senior secured notes.

Cipher Digital issued $1.7 billion in senior secured notes in November, causing its quarterly interest expense to jump from $3.2 million in the first three quarters to $33.4 million in the fourth quarter. Debt at this scale far exceeds the traditional mining industry—it is infrastructure-level investment betting that AI revenue can be monetized quickly to repay obligations.

Second is bitcoin selling**. The total number of bitcoin holdings held in reserve by listed miners has fallen by more than 15,000 coins from its peak cumulative level.** Core Scientific sold about 1,900 BTC worth $175 million in January and plans to liquidate almost all of its remaining holdings in Q1 2026. Bitdeer zeroed out its reserves in February. Riot Platforms sold 1,818 BTC worth $162 million in December.

Even Marathon, the largest public holder with 53,822 BTC, quietly adjusted its policy in its 10-K filing released in March, authorizing sales of reserves across its entire balance sheet. Some of the pressure came from its $350 million bitcoin collateralized credit facility—when the coin price fell into the $68,000 range, the loan-to-collateral ratio rose to 87%.

The miners selling bitcoin to fund AI buildouts are exactly the companies that protect the bitcoin network security through mining operations. This creates the core contradiction of the current transition: when mining is unprofitable but AI profits are rich, the rational economic decision is to reallocate capital away from mining operations. But if enough miners do that, the network’s security budget will shrink.

Hash rate data has already reflected this change. Bitcoin network hash rate peaked at about 1,160 exahashes per second in early October 2025, and then fell to about 920 exahashes per second, with three consecutive negative difficulty adjustments—its first since July 2022.

The valuation market has also priced in this business split. Miners that have secured high-performance computing contracts are valued at 12.3 times expected sales over the next twelve months, while pure-play mining companies are valued at only 5.9 times. The valuation premium for exposure to AI business exceeds more than double, further strengthening miners’ motivation to accelerate their transition.

At the same time, the geographic pattern of mining is also shifting with changing economics. The U.S., China, and Russia currently control about 68% of global hash rate. In just Q4, the U.S. market share rose by about 2 percentage points.

But emerging markets are moving to the center stage. Paraguay and Ethiopia have entered the global top ten mining countries, largely thanks to HIVE’s 300-megawatt mining site in Paraguay and Bitdeer’s 40-megawatt facility in Ethiopia.

Hash rate outlook and estimates

CoinShares forecasts that by the end of 2026, network hash rate will reach 1.8 zetahashes per second, and by end of March 2027 it will reach 2 zetahashes per second—pushing the timing of the earlier forecast back by one month.

However, this forecast is based on the assumption that bitcoin will rebound to $100,000 by the end of this year. If prices remain below $80,000, CoinShares expects the hash rate price to keep falling, causing more miners to exit and leading to further declines in hash rate.

If the bitcoin price stays below $70,000, it could trigger a larger-scale miner exodus. Ironically, the survivors would benefit from lower network difficulty.

Next-generation mining rigs may become a potential way out. Bitmain’s S23 series and Bitdeer’s SEALMINER A3 have energy efficiency below 10 joules per terahash, and are expected to be deployed at scale in the first half of 2026. Compared with today’s mid-generation miners, these new models can cut the energy cost per bitcoin by about half. But deploying them requires capital, and many miners are redirecting their capital to the AI space.

At the start of this cycle, the bitcoin mining industry was a group of companies primarily focused on maintaining network security and accumulating bitcoin; but now it is transforming into a group of companies building AI data centers and selling bitcoin to finance those builds.

Whether this is just a temporary response to an unfavorable economic environment or a permanent structural shift depends on one variable: the bitcoin price. If the bitcoin price rebounds to $100,000, mining profits will recover and the transition to AI will slow down; if the price stays at $70,000 or below, the transition will accelerate, and the mining industry we’ve known over the past decade will keep dissolving—fully evolving into another form.