Capitulation or Evolution: Why Miners Are Betting on Artificial Intelligence - ForkLog: Cryptocurrencies, AI, Singularity, Future

# Capitulation or Evolution: Why Miners Are Betting on Artificial Intelligence

The bitcoin mining industry is undergoing the most radical transformation in its entire history. What a couple of years ago seemed like a forced diversification amid market instability has, by the spring of 2026, led to a complete rebirth of the sector.

Traditional miners, for years ensuring stability and security for the blockchain, are rushing to retrain as data center operators for the needs of artificial intelligence. The change of course is accompanied by an unprecedented “sale of the family silver”: companies liquidate their accumulated bitcoin reserves to pay for Nvidia graphics accelerators and to repay enormous loans.

Classic mining aimed at accumulating an asset is quickly fading into the past, giving way to hybrid infrastructure models. But what future awaits the first cryptocurrency if hashing becomes only a low-margin side product of renting racks for neural networks?

The end of the HODL era for public companies

In the spring of 2026, the mining segment found itself in an ambiguous situation. At the end of the previous year, the Bitcoin network crossed the threshold of 1 ZH/s. However, the financial situation of companies generating that hash rate deteriorated significantly.

Bitcoin hash rate dynamics. Source: Glassnode.The industry is facing an “efficiency paradox”: the network’s total computing power continued to grow, while the hashprice fell to historical lows of $28–30 per PH/s.

For comparison: in the third quarter of 2025, profitability was at $55, and at the peak of bullish cycles, this figure was measured in hundreds of dollars.

Bitcoin hashprice dynamics. Source: Hashrate Index.The first quarter of 2026 became Bitcoin’s worst start in the past eight years. A 22.2% drop in the price—from approximately $87,500 in January to levels below $70,000 by the end of March—disrupted the economic models of most major players.

Quarterly Bitcoin price dynamics. Source: CoinGlass.Over the past six months, the asset has lost more than 40% in value. Under these conditions, the “mine and hold” strategy (or HODL) has stopped being effective and now threatens many companies with bankruptcy.

According to analysts at CoinShares and TheEnergyMag, the industry is facing large-scale capitulation. Its momentum is being temporarily masked by the inertia of major infrastructure projects and long-term electricity contracts, which prevent companies from simply “pulling the plug.”

Numbers are merciless

For most public mining companies, cryptocurrency mining has become unprofitable

By the end of the fourth quarter of 2025, the weighted-average full cost of mining one bitcoin (all-in cost) in the sector reached $79,995. With the market price of the asset around $70,000, each coin earned brings companies nearly $10,000 in net losses.

The average cost to mine bitcoin for individual large players such as TerraWulf and Core Scientific is significantly higher than the $100,000 mark. Source: CoinShares.The industry is facing a large-scale systemic crisis, driven by several factors at once.

Low income from transaction fees

Last autumn, network difficulty reached an all-time high, but miners’ income from transaction fees fell below 0.7% of the block reward. Bitcoin is used mainly for large settlements, and on-chain activity remains low.

Growth in fee revenue caused by the hype around the Runes protocol turned out to be short-lived.

Regulatory pressure and the cost of energy

In many countries, electricity tariffs continue to rise steadily. In the first quarter of 2026, average global prices for households increased by 9.8% year over year.

Additional difficulties arose in Texas—the largest mining hub. A bill, SB 6, went into effect, removing miners’ status as “priority customers”

Now they are required to provide the ERCOT network operator with the ability to remotely shut down equipment during peak loads and emergencies. This could potentially reduce the amount of time devices can operate continuously and increase operating risks for the business.

High debt burden

To aggressively expand capacity and survive the bear market, companies actively issued convertible bonds. Over the year, the total debt of public miners increased sixfold—from $2.1 billion to $12.7 billion. In 2026, amid falling revenue, servicing these obligations became a critical item of expense.

The cost structure and the condition of key players clearly demonstrate the scale of the problem:

A telling example was the situation with Cipher Digital. After issuing $1.7 billion in secured bonds at 7.125% per year, the company’s quarterly interest expenses jumped from $3.2 million to $33.4 million

Such a strategy is more like the moves of an infrastructure giant that goes all-in, betting that AI-computing revenue will cover obligations before a default occurs.

A technological dead end and the limits of Moore’s law

In addition to financial difficulties, the industry has approached a technological limit. The development of ASIC miners is slowing, reflecting the physical constraints of Moore’s law

If between 2020 and 2025, the energy efficiency of flagship devices increased by 65% (from 31 to 11–13.5 J/TH), then now switching to 3- and 5-nanometer chips is significantly more expensive. The efficiency gain is only 20–30%, while requiring colossal investment.

With the current asset price and electricity rates above $0.05 per kWh, old equipment—including the popular Antminer S19—becomes unprofitable. Smaller market participants that do not have access to wholesale electricity prices (on average, retail costs $0.12–0.15 per kWh) are forced to leave the industry.

Even at a tariff of $0.05 per kWh, the energy cost of operating Antminer S19-series devices to mine one bitcoin is only slightly lower than the current market price of the cryptocurrency. Source: f2pool.### New infrastructure standards and the entry threshold

Basic requirements for cryptocurrency mining have also changed dramatically—traditional air cooling is giving way to liquid cooling and immersion cooling

Using hydro installations increases the cost of each unit by $500–1000, and installing immersion tanks requires initial capital expenditures of $2000 to $5000 per unit of equipment.

Promising models such as S23 Hydro (claimed efficiency 9.5 J/TH) or SEALMINER from Bitdeer (target 5 J/TH) could help support business profitability. However, the investments that previously went toward upgrading ASIC device fleets are now flowing into an entirely different direction.

The great pivot: AI as a lifeline

Miners refocusing on providing computing power for artificial intelligence has become a forced measure amid falling profitability in cryptocurrency mining. Analysts on Wall Street call this process “infrastructure cannibalization”: companies dismantle racks with ASIC devices to free up power capacity for Nvidia graphics accelerators.

The projected revenue structure of major miners—the share of “non-crypto” income rising to 70% by the end of the year. Source: CoinShares.Reason is simple: neural network computing generates 2–5 times more revenue per consumed kilowatt-hour than supporting the Bitcoin network. Technology corporations urgently need infrastructure, while miners have access to large volumes of relatively cheap electricity and powerful industrial cooling systems.

The stock market responded quickly to this trend. The shares of companies with portfolios of contracts in high-performance computing trade at a 12.3x multiple of forecast revenue. At the same time, companies that kept their focus exclusively on mining are valued by the market at only 5.9x

The total contract volume in this new industry segment has already exceeded $70 billion, according to CoinShares.

Examples of business transformation

More and more illustrative cases of business-model changes are appearing in the market:

• Core Scientific. A twelve-year contract with an AI provider, CoreWeave, helped the company recover after its recent bankruptcy. The share of revenue from providing infrastructure for artificial intelligence here has already reached 39%;
• Keel Infrastructure (formerly Bitfarms). In the spring of 2026, the firm completed its rebranding, changed its exchange ticker, and moved its headquarters to New York. With this step, the company demonstrated a shift in focus from bitcoin mining to serving the traditional financial sector;
• TeraWulf (WULF). After securing investments from Google, the company redirected itself to the AI industry. Cryptocurrency mining now serves exclusively as a tool for utilizing excess or temporarily idle capacity.

However, entering the market as an AI provider requires large-scale investments. Building a standard mining facility costs $0.7–1 million per megawatt, while creating a Tier 3 data center for neural networks is estimated at $8–15 million for the same amount of capacity

To finance such projects in an environment of high borrowing rates, companies have to tap their main reserves.

Selling off the treasure troves

Public mining companies, which have traditionally been the main holders of bitcoin, are now putting significant pressure on the asset’s price. Companies are actively selling their reserves.

The long-running HODL strategy is gradually losing relevance. Riot Platforms was one of the first to abandon it: in 2025 it began regularly selling the mined coins to cover operating expenses and to finance the construction of a major facility in Corsicana. According to the company’s vice president, Josh Kane, mining has stopped being the end goal and now serves only as a tool to “maximize the value of megawatts.”

The trend was supported by other market participants as well. Bitdeer fully liquidated its cryptocurrency holdings, redirecting capital to the development and production of chips. Notably, the company moved to the top among publicly traded miners by available hash rate.

Credit risks and pressure on the market

The situation around MARA Holdings—the holder of the largest corporate reserve among miners—is indicative. Faced with a high debt burden and the need for capital to develop AI infrastructure, the company’s leadership made a strategic decision to liquidate part of the collateral.

In just March, MARA Holdings sold 15,133 BTC for approximately $1.1 billion, directing the proceeds to an early buyback of its own convertible bonds.

Despite the recent sale of more than 15,000 BTC, MARA Holdings still leads among miners by the amount of bitcoin reserves. Source: BitcoinMiningStock. The position is further worsened by the overall decline in buyer activity. In particular, spot bitcoin ETFs have shown outflows in recent months, and the Coinbase premium index has fallen into negative territory.

Except for March, since last November, exchange-traded funds have recorded capital outflows. Source: SoSoValue. By selling reserves to purchase infrastructure for AI projects, miners themselves are pushing the price of the first cryptocurrency down, making their core business even less profitable.

Geopolitics, network pulse, and centralization of the segment

Network technical indicators clearly illustrate the scale of the industry’s financial problems. A decline in hash rate from the record 1.16 ZH/s to 920 EH/s in the spring of 2026 is hard to call an ordinary seasonal correction. The network logged a series of three consecutive negative difficulty recalculations—something that has not happened since the time of the “great Chinese ban.”

Bitcoin mining difficulty dynamics. Source: Clover Pool. Under pressure from regulators and falling profitability, miners are forced to shift capacity to developing countries. Strict inspections in China’s Xinjiang and tighter sector legislation in Texas triggered a new wave of migration. Companies like HIVE Digital and Bitdeer are trying to gain access to low-cost, though stable, hydropower generation capacity in Paraguay and Ethiopia

Market participants interpret such expansion not as pursuing promising directions, but as an attempt to preserve classic mining in isolated regions.

At the same time, the highest-quality, energy-secured sites in the US and Europe are gradually coming under the control of technology giants. This creates a large, deferred threat.

The combined share of the US, China, and Russia in global hash rate exceeds 60%. Concentrating computing equipment in the hands of a limited number of corporations—whose business now depends on the profitability of AI-sector contracts—puts at risk the very concept of Bitcoin’s resilience to censorship.

If tomorrow, for example, Microsoft were to offer corporate miners to repurpose their remaining data centers for training language models at a rate twice as high as revenue from cryptocurrency mining, Bitcoin’s hash rate could collapse within days.

A threshold of $100,000 or oblivion

Ahead of the 2028 halving, when the block reward will drop to 1.5625 BTC, the future of the mining industry depends directly on the asset’s price quotes. According to CoinShares analysts, to restore mining profitability to an acceptable level, the first cryptocurrency needs to hold above the $100,000 mark by the end of this year.

If that does not happen, the market may face a range of negative consequences:

1. Acquisition of specialist companies. In a prolonged stagnation within the $60,000–75,000 range, businesses that have not managed to diversify their operations toward AI risk becoming targets of hostile takeovers. Their infrastructure could be bought at a discounted value solely for access to power grids.
2. Cascading bankruptcies. The current realized price of Bitcoin (the average cost of buying all coins in circulation) is about $54,100. During deep corrections, the market often tests this level. Such a deep drop in price would be critical for most leveraged players, triggering a chain reaction of equipment liquidations and accumulated bitcoin reserves.
3. Technological transformation. The alternative path is linked to expanding the blockchain ecosystem. Widespread adoption of payments through the Lightning Network, development of second-layer solutions, and BTCFi protocols could help support miners. But for now, the rollout of these technologies is clearly lagging behind the rate at which revenue is falling.

A change of paradigm

The era of classic mining, isolated from the global technology sector, is coming to an end. Against the backdrop of a new “gold rush,” the industry is inevitably undergoing transformation: a narrowly specialized business becomes an infrastructure base for high-performance computing

Abandoning the HODL strategy and selling off cryptocurrency reserves has become a forced price for adaptation. To cope with the debt burden and align with new realities, companies have to use accumulated capital. In these conditions, the future of traditional players depends on their ability to balance maintaining blockchain security with more favorable computing contracts.

Despite falling profitability and the risks of hash rate centralization, changing course opens new opportunities for the sector. Integrating into the artificial intelligence industry can make miners’ business more resilient to the bear phases of the cryptocurrency market.

The line between mining Bitcoin and serving neural networks is blurring, and this process has become irreversible. The key question now is Key Question: who из действующих лидеров сегмента успеет закрепиться；which of the existing leaders in the segment will manage to entrench itself in the new system of coordinates.