I noticed an interesting trend in the mining market. Publicly traded Bitcoin miners are currently in a critical situation — losing about $19,000 on each coin mined while the BTC price remains around $74,350. This is unsustainable, and the industry understands it. A radical shift has occurred.

Miners are massively transitioning to artificial intelligence infrastructure and high-performance computing. According to recent reports, the sector has already announced contracts worth over $70 billion in AI and HPC. Core Scientific signed a 12-year agreement with CoreWeave for $10.2 billion. TeraWulf has contracts totaling $12.8 billion. Hut 8 entered into a 15-year deal worth $7 billion. This is not just diversification — it’s a complete transformation.

Currently, publicly traded miners earn about 30% of their revenue from AI, but they forecast reaching 70% by the end of this year. Core Scientific already generates 39% of its total revenue from AI colocation. In fact, these companies are turning into data center operators, who continue mining Bitcoin in parallel. The economics are very clear: GPUs are the backbone of modern AI infrastructure, valued at $8–15 million per megawatt, whereas Bitcoin mining requires only $700,000 to $1 million. But AI promises margins above 85% with multi-year revenue visibility.

This transition is financed in two ways. First, debt. IREN issued convertible bonds worth $3.7 billion. TeraWulf has a total debt of $5.7 billion. Cipher Digital added $1.7 billion in November, sharply increasing their interest expenses. This isn’t ordinary debt — it’s a bet on rapid revenue generation from AI.

Second, Bitcoin sales. Public miners have reduced BTC reserves by more than 15,000 coins from their peaks. Core Scientific sold 1,900 BTC in January and plans to liquidate almost all remaining reserves in the first quarter. Bitdeer completely depleted its reserves in February. Even Marathon, the largest public holder with 53,800 BTC, expanded its sales policy partly due to pressure from a $350 million credit agreement secured by Bitcoin.

An interesting tension arises here. Miners selling BTC to fund AI infrastructure are the same companies whose operations secure the Bitcoin network. When mining is unprofitable and AI is profitable, it makes sense to reallocate capital. But if enough miners do this, the network’s security budget could decline.

Hash rate data already reflect this. The network peaked at 1.16 zettahashes in early October 2025 and has since fallen to 920 EH/s with three consecutive difficulty adjustments downward. This is the first such decline since July 2022. The market has taken this into account — miners with HPC contracts are trading at a multiple of 12.3 times expected revenue, pure mining companies at 5.9. The market is paying more than twice as much for exposure to AI.

Geography is also shifting. The US, China, and Russia control about 68% of the global hash rate, but emerging markets are coming to the forefront. Paraguay and Ethiopia entered the top 10, thanks to HIVE’s 300-megawatt facility in Paraguay and Bitdeer’s 40-megawatt operation in Ethiopia.

What are the prospects? CoinShares forecasts a hash rate of 1.8 zettahashes by the end of the year and 2 zettahashes by March 2027. But this depends on BTC recovering to $100,000. If the price stays below $80,000, further hash price declines are expected. Persistent movement below $70,000 could trigger a large-scale capitulation, which paradoxically would benefit the survivors by reducing difficulty.

Next-generation equipment offers a potential lifeline. Bitmain S23 and Bitdeer SEALMINER A3 operate with energy consumption below 10 joules per terahash and are expected in the first half of 2026. This will roughly halve the energy costs per Bitcoin. But deploying this equipment requires capital, which miners are directing into AI.

The industry has entered a cycle as a group of companies securing network security and accumulating Bitcoin, and as a group building data centers for AI and selling BTC to fund them. Whether this is a temporary reaction or a permanent shift depends on one thing: the price of Bitcoin. At $100,000, mining margins will recover, and the shift will slow down. At $70,000 and below, the transition will accelerate, and the mining sector in its previous form will be completely transformed.