BTC Mining Companies' Transformation: Selling BTC to Fund AI Computing Power—The Future of the AI-Powered Computing Power Defense Battle

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

Key takeaways to understand:

• Bitcoin mining public companies are facing an unsustainable economic model—about a $190,000 loss for every Bitcoin produced—so they are rapidly shifting to the artificial intelligence (AI) and high-performance computing (HPC) infrastructure space.

• Mining companies have signed more than $70 billion worth of AI and high-performance computing contracts. For some miners, by the end of 2026, they expect 70% of revenue to come from AI, effectively turning into a business model centered on operating data centers, with Bitcoin mining as a secondary activity.

• This transition is funded through significant borrowing and large-scale selloffs of Bitcoin, which drives down network hashrate and puts network security under pressure. As a result, the industry’s future will depend on whether Bitcoin’s price can rebound to around $100,000.

The Bitcoin mining industry is going through the most fundamental transformation in its history, and the****clearest sign isn’t a hashrate or difficulty adjustment—it’s companies’ balance sheets.

CoinShares’ “Q1 2026 Mining Report,” published this week, shows that in Q4 2025, the weighted average cash cost to produce one Bitcoin by public miners had 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 each BTC they mine.

These numbers aren’t sustainable, and the industry knows it. The response is that the entire industry is fully pivoting to AI infrastructure—which is redefining what these companies actually are.

According to the CoinShares report, the total value of AI and high-performance computing contracts already announced in the public miner space exceeds $70 billion. Just the expanded cooperation deals between CoreWeave and Core Scientific total $10.2 billion over 12 years. TeraWulf’s signed HPC contract revenue is $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 cooperation agreements.

By the end of 2026, public miners are expected to have up to 70% of their revenue coming from AI; currently, the figure is about 30%. Core Scientific’s AI hosting revenue accounts for 39% of its total revenue, TeraWulf’s is 27%, and IREN’s is 9% and rapidly expanding—its under-construction liquid-cooled GPU compute capacity can reach up to 200 megawatts.

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

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

The key metric determining mining companies’ unit compute revenue—the price of hashrate—fell to an all-time low in early March after the halving, at about $28 to $30 per day per petahash. At this level, miners using previous-generation hardware need to keep power costs below $0.05 per kilowatt-hour to sustain cash profitability. Meanwhile, AI infrastructure contracts can offer profit margins of 85% or more and provide visible revenue for years.

Financial operating mechanisms

The report notes that this transition is mainly financed in two ways, with data that is clearly trackable.

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

Cipher Digital issued $1.7 billion of 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. The scale of this debt is far beyond that of the traditional mining industry; it represents infrastructure-level investment that is betting AI revenue can be realized quickly to pay back the debt.

Second is Bitcoin sell-offs. The total number of Bitcoin holdings among public 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 nearly all remaining holdings in Q1 2026. Bitdeer wiped its reserves to zero in February. Riot Platforms sold 1,818 BTC worth $162 million in December.

Even Marathon, the largest publicly disclosed holder with 53,822 BTC, quietly adjusted its policy in its 10-K report released in March, authorizing the sale of reserves across its entire balance sheet. Some of the pressure comes from its $350 million Bitcoin-collateralized credit facility—when the coin price fell into the $68,000 range, the loan-to-collateral ratio had risen to 87%.

Miners selling Bitcoin to fund AI buildouts are precisely the companies that secure the Bitcoin network through mining operations. This forms the core contradiction of the current transition: when mining is unprofitable but AI profits are rich, the rational economic decision is to redeploy capital away from mining. But if enough miners do this, the network’s security budget will shrink.

Hashrate data already reflects this shift. Bitcoin network hashrate peaked at about 1,160 exahashes per second in early October 2025, then fell to about 920 exahashes per second and has seen three consecutive negative difficulty adjustments—its first time since July 2022.

The valuation market has priced in this business split. Miners that have secured high-performance computing contracts are valued at 12.3 times forward twelve-month sales, while pure-play mining companies are valued at only 5.9 times. The market’s valuation premium for exposure to AI business is more than double, further reinforcing miners’ incentive to accelerate the transition.

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

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

Hashrate projections and estimates

CoinShares expects that network hashrate will reach 1.8 zetahashes per second by the end of 2026, and 2 zetahashes per second by the end of March 2027—one month later than the previous forecast.

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 hashrate price to keep falling, more miners will exit, and hashrate will decline further.

If Bitcoin’s price remains below $70,000, it could trigger a larger-scale miner exodus—though paradoxically, survivors can benefit from lower network difficulty.

The next generation of 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; they 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 focused mainly on maintaining network security and accumulating Bitcoin. Now it is transforming into a group of companies building AI data centers and selling Bitcoin to fund that buildout.

Whether this is a temporary response to an unfavorable economic environment or a permanent structural shift depends on one variable: Bitcoin’s price. If Bitcoin rebounds to $100,000, mining profits will recover and the shift to AI will slow; if prices stay at $70,000 or below, the transition will accelerate, and the mining industry we’ve known over the past decade will continue to erode—completely morphing into another form.