Each mining operation loses $19,000 per coin mined as Bitcoin mining companies collectively defect AI

Publicly traded Bitcoin mining companies are experiencing a negative mining cost situation and are accelerating their transformation into AI data center operators through debt and Bitcoin sales, highlighting the increasingly apparent contradiction between network hash rate security and structural industry reshaping.

Author: Shaurya Malwa

Translation: Deep Tide TechFlow

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

The industry is undergoing the most fundamental transformation since its inception: contracts worth over $70 billion for AI/HPC have already been signed, publicly traded mining companies have cumulatively sold over 15,000 BTC, and companies like IREN and TeraWulf have taken on billions of dollars in debt. By the end of 2026, some mining companies may see AI revenue account for as much as 70% of their total revenue. They are transforming from Bitcoin miners into data center operators that happen to still mine Bitcoin. The core contradiction is that the companies securing Bitcoin network safety are the ones selling coins to shift to AI, with the hash rate having dropped from a peak of 1,160 EH/s to around 920 EH/s.

• The Bitcoin mining industry is undergoing the most fundamental transformation since its inception, with the clearest signal being not hash rate or difficulty adjustment, but balance sheets.
• CoinShares’ mining report for Q1 2026 released this week shows that the weighted average cash cost for publicly traded mining companies to mine one Bitcoin rose to approximately $79,995 in Q4 2025.
• Bitcoin has been trading in the range of $68,000 to $70,000, and a report from CoinDesk last week estimated losses of about $19,000 for each BTC mined.
• This number is unsustainable, and the industry is well aware of it. The response is a full pivot to AI infrastructure—which is reshaping the essence of these companies.

According to the CoinShares report, publicly traded 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 valued at $10.2 billion and spans 12 years. TeraWulf has signed HPC contracts worth $12.8 billion. Hut 8 signed a $7 billion, 15-year AI infrastructure lease at the River Bend campus. Cipher Digital has signed a multi-billion dollar agreement with Fluidstack, which is backed by Google.

By the end of 2026, the share of AI revenue for publicly traded mining companies may reach as high as 70%, while it is currently about 30%. Core Scientific’s AI hosting revenue already accounts for 39% of its total revenue. TeraWulf is at 27%. IREN is currently at 9% but is rapidly expanding, with an under-construction liquid-cooled GPU hash rate capacity of up to 200 megawatts.

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 revenue per unit of hash rate for miners—dropped to a historic low of about $28-$30/PH/day in early March after the halving.

At this level, miners using mid-generation mining machines need an electricity price below $0.05 per kilowatt-hour to maintain cash profitability. In contrast, the promised profit margin of AI infrastructure contracts exceeds 85%, with visible revenue guarantees for several years.

Where does the money for transformation come from?

CoinShares’ report indicates that there are two sources of funding for this transformation, both of which are clearly visible in the data.

First, debt. The leverage level across the industry has undergone a qualitative change. IREN currently carries $3.7 billion in convertible notes spread across five series. TeraWulf’s total debt is $5.7 billion, consisting of convertible bonds and priority secured notes from its hash rate subsidiary.

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

Second, selling coins. Publicly traded mining companies have cumulatively sold over 15,000 BTC from peak levels. Core Scientific sold approximately 1,900 BTC in January (worth $175 million) and plans to clear almost all remaining holdings in Q1 2026. Bitdeer sold off its holdings in February. Riot Platforms sold 1,818 BTC in December (worth $162 million).

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

Who will protect the Bitcoin network?

The companies selling coins to pivot to AI are precisely those that operate mining to secure 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 network’s security budget will contract.

Hash rate data has already reflected this. The network hash rate peaked at around 1,160 EH/s in early October 2025, then fell to around 920 EH/s, experiencing three consecutive negative difficulty adjustments—the first since July 2022.

Valuation divergence

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

The geographical landscape is also changing. The U.S., China, and Russia currently control about 68% of the global hash rate. In just Q4, the U.S. increased its market share by about 2 percentage points. However, emerging markets are also entering the fray—Paraguay and Ethiopia have broken into the top ten mining countries, driven by HIVE’s 300 megawatts and Bitdeer’s 40 megawatts facilities.

Hash rate forecast

CoinShares predicts that the network hash rate 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 the price remains below $80,000, CoinShares anticipates that hash rates will continue to decline, leading to further exits from mining. A sustained drop below $70,000 could trigger a larger-scale capitulation—ironically, this would benefit the 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 have energy efficiencies below 10 joules/TH, are expected to be shipped in large quantities in the first half of 2026. These mining machines can roughly halve the energy cost per Bitcoin compared to currently mainstream mid-generation models. However, deploying them requires capital—and many miners are channeling funds into AI.

At the start of this cycle, the Bitcoin mining industry was made up of companies that secured the network and hoarded 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 centered around mining for the past decade will continue to fade into something entirely different.