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, CoinDesk Token & Data Asia Co-Head; Translation: xz@GOLDEN FINANCE

Key information to know:

• Public Bitcoin miners are facing an unsustainable economic model—about a $19,000 loss for every Bitcoin produced (roughly $19,000 per BTC)—so they are rapidly shifting toward artificial intelligence and high-performance computing infrastructure.

• Miners 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. In practice, they are moving to a business model dominated by operating data centers, with Bitcoin mining as a secondary activity.

• This transition is being funded through heavy borrowing and large-scale BTC sell-offs. That is driving down network hashrate and putting pressure on network security—meaning the industry’s future hinges on whether Bitcoin’s price can rebound to around $100,000.

The Bitcoin mining industry is undergoing its most fundamental transformation in history, and the** clearest sign is not hashrate or difficulty adjustments, but companies’ balance sheets.**

CoinShares’ mining report for Q1 2026 released 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 are losing about $19,000 for every BTC they mine.

These figures are not sustainable, and the industry knows it. The response has been a full-scale pivot across the entire industry to AI infrastructure—which is redefining what these companies are really worth.

According to the CoinShares report, the cumulative value of AI and high-performance computing contracts announced to date by companies in the listed miner universe exceeds $70 billion. Just the expanded partnership transactions involving CoreWeave and Core Scientific add up to $10.2 billion over a 12-year period. TeraWulf’s signed HPC contract revenue totals $12.8 billion. Hut 8 has signed a 15-year, $7 billion AI infrastructure leasing agreement for its River Bend campus. Cipher Digital and Fluidstack—an investment by Google—have reached multi-billion-dollar partnership agreements.

By the end of 2026, listed miners are expected to have as much as 70% of their revenue come from AI business, while this figure is currently about 30%. Core Scientific’s AI hosting revenue is already 39% of its total revenue; TeraWulf is 27%; and IREN is 9% and rapidly expanding—its under-construction liquid-cooled GPU hashrate capacity could reach up to 200 megawatts.

That means these mining companies are increasingly turning into data center operators, while Bitcoin mining is gradually becoming a side business.

The economics explain why. CoinShares analysis shows that the cost per megawatt of Bitcoin mining infrastructure is about $0.7 million to $1.0 million, while the cost per megawatt of AI infrastructure is $8 million to $15 million—there is a significant gap, but AI business can deliver structurally higher and more stable returns.

The metric that determines miner unit revenue—hashrate price—fell to the historical low early in March following the halving, at about $28 to $30 per day per petahash. At this level, miners using previous-generation hardware need to keep electricity costs below $0.05 per kWh to maintain cash profitability. Meanwhile, AI infrastructure contracts can offer profit margins of 85% or more and provide visibility into revenue for years.

Financial operating mechanisms

The report says this transition is mainly financed through two ways, and the relevant data is clear and traceable.

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

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

Second is Bitcoin sell-offs**. The total amount of BTC held in reserve by listed miners has fallen by more than 15,000 coins from the peak cumulative level.** Core Scientific sold about 1,900 BTC worth $175 million in January and plans to liquidate nearly all of its remaining holdings in Q1 2026. Bitdeer cleared its reserves to zero in February. In December, Riot Platforms sold 1,818 BTC worth $162 million.

Even Marathon, the largest publicly disclosed holder with 53,822 BTC, quietly adjusted its policy in the 10-K filed in March, authorizing the sale of reserves across its entire balance sheet. Some 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 Bitcoin network security through mining operations. This creates the core contradiction in the current transition: when mining is unprofitable but AI profits are plentiful, the rational economic decision is to reallocate capital away from mining. But if enough miners do this, the network’s security budget will shrink.

Hashrate data already reflects this change. The Bitcoin network’s hashrate peaked at about 1,160 exahashes per second in early October 2025, then fell to about 920 exahashes per second, with three consecutive negative difficulty adjustments—its first such occurrence 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 their sales over the next 12 months; pure-play mining companies are valued at only 5.9 times. The valuation premium for exposure to AI business is more than double, further reinforcing miners’ motivation to accelerate their transition.

At the same time, the geographic pattern of mining is changing with the shift in economics. The U.S., China, and Russia currently control about 68% of the global hashrate. In just Q4, the U.S. increased its market share by roughly 2 percentage points.

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

Hashrate outlook and estimates

CoinShares forecasts that by the end of 2026, the network’s hashrate will reach 1.8 zetahashes hashes per second, and by the end of March 2027 it will reach 2 zetahashes hashes per second—one month later than its earlier forecast.

But this forecast is based on the assumption that Bitcoin will rebound to $100,000 by the end of this year. If the price stays below $80,000, CoinShares expects the hashrate price to keep falling, more miners will exit, and hashrate will decline further.

If the Bitcoin price continues to stay below $70,000, it could trigger an even larger wave of miner exits; ironically, survivors could benefit from lower network difficulty.

New-generation mining machines 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 in large numbers 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 sector.

At the start of this cycle, the Bitcoin mining industry was a group of companies focused mainly on maintaining network security and accumulating Bitcoin; today it is transforming into companies that build AI data centers and sell Bitcoin to fund them.

Whether this is merely a temporary response to an unfavorable economic environment, or a permanent structural shift, depends on one variable: Bitcoin price. If Bitcoin rebounds to $100,000, mining profits would recover and the transition to AI would slow; if the price remains at $70,000 or below, the transition will accelerate, and the mining industry we have known for the past decade will continue to erode, fully transforming into another form.