Each mining of one coin results in a loss of $19,000. Bitcoin mining companies collectively defect to AI.

Original Author: Shaurya Malwa

Original Compilation: Deep Tide TechFlow

Introduction: CoinShares’ latest mining report shows that the weighted average cost for listed mining companies to mine one Bitcoin has risen to about $80,000, while the current price of BTC is around $68,000 to $70,000—resulting in a loss of $19,000 for each mined Bitcoin.

The industry is undergoing the most fundamental transformation since its inception: contracts worth over $70 billion for AI/HPC have been signed, listed mining companies have cumulatively sold over 15,000 BTC, and companies like IREN and TeraWulf are burdened with billions of dollars in debt. By the end of 2026, some mining companies may see AI revenue account for 70% of their income. They are shifting from Bitcoin miners to data center operators that just happen to still be mining. The core contradiction is that the companies ensuring the security of the Bitcoin network are the same ones transitioning to AI, with hash power having fallen from a peak of 1,160 EH/s to about 920 EH/s.

• The Bitcoin mining industry is experiencing its most fundamental transformation since its inception, with the clearest signal not being hash power or difficulty adjustments, but balance sheets.
• CoinShares’ Q1 2026 mining report released this week shows that the weighted average cash cost for listed mining companies to mine one Bitcoin rose to about $79,995 in Q4 2025.
• Bitcoin has been trading in the $68,000 to $70,000 range, and a report from CoinDesk last week estimated that each mined BTC incurs a loss of about $19,000.
• This number is unsustainable, and the industry knows it. The response is a complete shift towards AI infrastructure—which is reshaping the essence of these companies.

According to the CoinShares report, listed mining companies have cumulatively announced over $70 billion in AI and high-performance computing (HPC) contracts. The expanded agreement between CoreWeave and Core Scientific is worth $10.2 billion and spans 12 years. TeraWulf has signed HPC contracts worth $12.8 billion. Hut 8 has signed a $7 billion, 15-year lease for AI infrastructure at River Bend Park. Cipher Digital signed a multi-billion dollar agreement with Fluidstack, which is backed by Google.

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

This means that these mining companies are increasingly resembling data center operators, just happening to still mine Bitcoin.

The economic rationale explains why. CoinShares data shows that the cost of Bitcoin mining infrastructure is around $700,000 to $1 million per megawatt, while AI infrastructure costs about $8 million to $15 million per megawatt. The gap is significant, but AI offers structurally higher and more stable returns.

The hash price—an indicator of miners’ revenue per unit of hash power—fell to a historical low of about $28 to $30 per PH per day in early March after the halving.

At this level, miners using mid-tier machines need electricity prices below $0.05 per kilowatt-hour to maintain cash profitability. In contrast, AI infrastructure contracts promise profit margins exceeding 85%, with years of visible revenue guarantees.

Where Does the Money for Transformation Come From?

CoinShares’ report highlights two sources of funding for this transformation, both clearly visible in the data.

First, debt. The leverage levels across the industry have undergone a qualitative change. IREN now carries $3.7 billion in convertible notes, divided into five series. TeraWulf’s total debt is $5.7 billion, consisting of convertible bonds and senior secured notes from its hash power subsidiary.

Cipher Digital issued $1.7 billion in senior secured notes in November, causing its quarterly interest expenses to soar from $3.2 million over the previous nine months to $33.4 million in just Q4. This is not a mining-level debt burden; it’s an infrastructure-level bet—betting that AI revenue can come in fast enough to cover debt obligations.

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

Even Marathon, the largest publicly listed holder (with 53,822 BTC), quietly expanded its policy in its March 10-K annual report, authorizing sales from the entire balance sheet reserves. Part of the reason is the pressure from its $350 million Bitcoin collateral credit line— as prices fell toward $68,000, the loan-to-value (LTV) ratio climbed to 87%.

Who Will Protect the Bitcoin Network?

The companies selling coins to invest in AI are precisely those mining operations that ensure the security of the Bitcoin network. This forms the core contradiction of this transformation. When mining is unprofitable and AI is highly profitable, the rational economic decision is to divert funds away from mining. However, if enough miners do this, the security budget of the network will shrink.

Hash power data has already reflected this. Network hash power peaked at about 1,160 EH/s in early October 2025, then fell to about 920 EH/s, resulting in three consecutive negative difficulty adjustments—this is the first time since July 2022.

Valuation Divergence

The market has already priced this divergence. Mining companies with signed HPC contracts are currently trading at 12.3 times their revenue over the next 12 months. Pure mining companies are only at 5.9 times. The market has paid over double the premium for AI exposure, further reinforcing the motive for transformation.

The geographical landscape is also changing. The United States, China, and Russia currently control about 68% of global hash power. Just in Q4 alone, the U.S. increased its market share by about 2 percentage points. But emerging markets are also entering the fray—Paraguay and Ethiopia have made it into the top ten mining countries, driven by HIVE’s 300 megawatts and Bitdeer’s 40 megawatts facilities.

Hash Power Forecast

CoinShares predicts that network hash power will reach 1.8 ZH/s by the end of 2026 and 2 ZH/s by the end of March 2027 (a month later than previously forecasted).

However, this prediction hinges on Bitcoin returning to $100,000 by the end of the year. If prices remain below $80,000, CoinShares estimates that hash prices will continue to decline, leading to further reductions in hash power and more miners exiting the industry. Prolonged dips below $70,000 could trigger larger-scale capitulation—ironically, this would benefit survivors by lowering difficulty.

A new generation of hardware offers a potential lifeline. Bitmain’s S23 series and Bitdeer’s self-developed SEALMINER A3 both boast energy efficiencies below 10 joules/TH and are expected to be shipped in large quantities in the first half of 2026. These machines could roughly halve the energy cost per Bitcoin compared to currently mainstream mid-tier models. However, deploying them requires capital— and many miners are directing funds toward AI.

At the start of this cycle, the Bitcoin mining industry consisted of companies protecting the network and hoarding Bitcoin. It is exiting this cycle under a different identity: a group of companies building AI data centers and selling Bitcoin to finance their operations.

Is this a temporary reaction to an unfavorable economic environment or a permanent structural shift? It depends on one variable: the price of Bitcoin. If it returns to $100,000, mining profits will recover, and the AI transformation will slow. If it stays at $70,000 or lower, the transformation will accelerate, and the mining industry that has been centered around mining for the past decade will continue to fade into something entirely different.