The Life-and-Death Transformation of Bitcoin Mining Companies: Selling BTC to Blood-Infuse AI — What's Next for the Hashrate Defense Battle

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

Key information you need to know:

• Public Bitcoin mining companies are facing an unsustainable economic model—producing about 1 Bitcoin costs roughly $19k in losses per coin, so they are rapidly shifting toward artificial intelligence and high-performance computing infrastructure.

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

• This shift has been funded through heavy borrowing and large-scale selling of Bitcoin, which has led to a drop in network hashrate and increased pressure on network security—meaning the future of the entire industry depends on whether Bitcoin’s price can rebound to around $100k.

**The Bitcoin mining industry is undergoing its most fundamental transformation in history, and **the clearest sign is not hashrate or difficulty adjustments, but companies’ balance sheets.

CoinShares’ recently released Q1 2026 Mining Report shows that in Q4 2025, the weighted average cash cost for public miners to produce 1 Bitcoin has risen to about $79,995.

Bitcoin is trading between $68k and $70k, while CoinDesk’s report last week estimates that miners lose about $19,000 for each BTC mined.

These figures are not sustainable, and the industry knows it. The response has been that the entire industry is fully pivoting to AI infrastructure—which is redefining what these companies are really about.

According to the CoinShares report, the total value of AI and high-performance computing contracts announced so far by the public miner sector has exceeded $70 billion. Just the expanded cooperation deals involving CoreWeave and Core Scientific are worth $10.2 billion over a 12-year period. The HPC contract revenue already signed by TeraWulf is $12.8 billion. Hut 8 signed a 15-year, $7 billion AI infrastructure leasing agreement for its River Bend campus. Cipher Digital and Fluidstack—invested in by Google—have reached cooperation agreements worth billions of dollars.

By the end of 2026, public miners are expected to derive as much as 70% of their revenue from AI business, whereas that figure is currently 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 growing rapidly—its under-construction liquid-cooled GPU capacity can reach up to 200 megawatts.

That means these mining companies are increasingly turning into data center operators, while Bitcoin mining is gradually becoming a secondary business.

The economics explain why. According to CoinShares analysis, the per-megawatt cost of Bitcoin mining infrastructure is roughly $700k to $1 million, while the per-megawatt cost of AI infrastructure is $8 million to $15 million—a substantial gap. But AI business can provide structurally higher and more stable returns.

The metric that determines miner unit revenue—hashrate price—fell to a historical low in early March after the halving, at roughly $28 to $30 per day per petahash. At that level, miners using previous-generation hardware need to keep electricity costs below $0.05 per kWh to sustain cash profits. Meanwhile, AI infrastructure contracts can offer profit margins of 85% or more and revenue that can be visible for years.

Financial operating mechanisms

The report points out that this shift is primarily financed through two ways, and the relevant data are clear and traceable.

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, and at the level of its computing business it is split 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 type of debt is far beyond that of the traditional mining industry. It is infrastructure-level investment betting that AI revenue can be monetized quickly to repay the debt.

Second is Bitcoin selling**. The total amount of Bitcoin held by public miners has fallen by more than 15k BTC from its peak cumulative level.** Core Scientific sold about 1,900 BTC worth $175 million in January and plans to liquidate almost all remaining holdings in Q1 2026. Bitdeer zeroed out its reserves 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 filing released in March, authorizing the sale of reserves across its entire balance sheet. Some pressure comes from its $350 million Bitcoin-backed credit facility—when the coin price fell to the $68,000 range, the loan-to-collateral ratio had risen to 87%.

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

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

The valuation market has also priced in this business divergence. Miners that have secured high-performance computing contracts are valued at 12.3 times their sales over the next twelve months; 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 strengthening miners’ incentives to accelerate the transition.

At the same time, the geographic pattern of mining is also changing as economics shift. The U.S., China, and Russia currently control about 68% of the world’s hashrate. In only Q4, the U.S.’s market share increased by about 2 percentage points.

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

Hashrate forecasts and estimates

CoinShares forecasts that by the end of 2026 the network hashrate will reach 1.8 zetahashes per second, and by late March 2027 it will reach 2 zetahashes per second—delayed by one month compared with the prior forecast.

However, this forecast is based on the assumption that Bitcoin will rebound to $100k by the end of this year. If the price remains below $80k, CoinShares expects the hashrate price to continue falling, more miners will exit, and hashrate will decline further.

If the Bitcoin price stays below $70k, it could trigger a larger-scale wave of miner exits. Ironically, survivors would benefit from the reduced network difficulty.

Next-generation 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, and are expected to be deployed in large scale in the first half of 2026. Compared with today’s mid-generation miners, these new models could cut the energy cost per Bitcoin by about half. But deploying them requires funding, and many mining firms are shifting their capital to the AI sector.

At the start of this cycle, the Bitcoin mining industry was still a group of companies mainly focused 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 those efforts.

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