Original Title: Bitcoin miners are becoming AI companies and selling their BTC to fund the transition
Original Author: Shaurya Malwa, CoinDesk
Original Translation: Deep Tide TechFlow
Deep Tide Introduction: CoinShares' latest mining report shows that the weighted average cost for publicly listed 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—meaning that every coin mined results in a loss of about $19,000. The following is the original content:
The industry is undergoing the most fundamental transformation since its inception: contracts worth over $70 billion for AI/HPC have been signed, publicly listed mining companies have sold off more than 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 make up 70% of their total income. They are transitioning from Bitcoin miners to data center operators who just happen to still be mining. The core contradiction is: the companies that are selling coins to transition to AI are the ones that ensure the security of the Bitcoin network, with computing power having dropped from a peak of 1,160 EH/s to about 920 EH/s.
· The Bitcoin mining industry is experiencing the most fundamental transformation since its inception, with the clearest signal not being the computing power or difficulty adjustment, but the balance sheets.
· CoinShares’ mining report for Q1 2026 released this week shows that by Q4 2025, the weighted average cash cost for publicly listed mining companies to mine one Bitcoin has risen to about $79,995.
· Bitcoin has been trading in the $68,000 to $70,000 range, and CoinDesk's report last week estimated that each BTC mined results in a loss of about $19,000.
· This figure is unsustainable, and the industry knows it. The response is a full pivot to AI infrastructure—this is reshaping the essence of these companies.
According to the CoinShares report, publicly listed mining companies have cumulatively announced over $70 billion in AI and high-performance computing (HPC) contracts. CoreWeave’s expanded agreement with Core Scientific is valued at $10.2 billion and spans 12 years. TeraWulf has signed $12.8 billion in HPC contract revenue. Hut 8 has signed a $7 billion, 15-year AI infrastructure lease in the River Bend complex. Cipher Digital has a multi-billion-dollar agreement with Fluidstack, which is invested in by Google.
By the end of 2026, AI revenue for publicly listed mining companies could account for as much as 70%, while it is currently about 30%. Core Scientific’s AI hosting revenue already accounts for 39% of total revenue. TeraWulf is at 27%. IREN is currently at 9% but is expanding rapidly, with a liquid-cooled GPU capacity under construction of up to 200 megawatts.
This means that these mining companies are increasingly resembling data center operators, just happening to still mine Bitcoin.
The economics explain why. CoinShares data indicates 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 substantial, but AI offers structurally higher and more stable returns.
The hash price—a metric measuring miners’ revenue per unit of computing power—fell to a historical low of about $28-$30/PetaHash/day in early March after the halving.
At this level, miners using medium-sized mining rigs require electricity prices below $0.05 per kilowatt-hour to maintain cash profitability. In contrast, the profit margin promised by AI infrastructure contracts exceeds 85%, with years of visible revenue assurance.
Where does the money for transformation come from?
CoinShares’ report points out that there are two sources of funding for this transformation, both clearly visible in the data.
First, leveraging debt. The leverage level across the industry has undergone a qualitative change. IREN is currently burdened with $3.7 billion in convertible notes, divided into five series. TeraWulf’s total debt is $5.7 billion, comprising convertible bonds and its computing power subsidiary's senior secured notes.
Cipher Digital issued $1.7 billion in senior secured notes in November, resulting in its quarterly interest expenditures skyrocketing from $3.2 million for the previous nine months to $33.4 million for just Q4. This is not a mining-level debt burden, but an infrastructure-level bet—betting that AI revenues can grow fast enough to cover debt obligations.
Second, selling coins. Publicly listed mining companies have cumulatively reduced their holdings by over 15,000 BTC from peak levels. Core Scientific sold about 1,900 BTC in January (worth $175 million) and plans to offload nearly all remaining holdings in Q1 2026. Bitdeer zeroed its holdings in February. Riot Platforms sold 1,818 BTC in December (worth $162 million).
Even the largest publicly listed holder, Marathon (holding 53,822 BTC), quietly expanded its policy in the 10-K annual report in March, authorizing sales from the entire balance sheet reserves. Part of the reason is the pressure from its $350 million Bitcoin collateral credit line—as the price dropped towards $68,000, the loan-to-value (LTV) ratio climbed to 87%.
Who will protect the Bitcoin network?
The companies selling coins to pursue AI are precisely those that operate mining to secure the Bitcoin network. This constitutes the core contradiction of this transformation. When mining is unprofitable but AI is very profitable, the rational economic decision is to move funds away from mining. Yet, if enough miners do so, the network's security budget will shrink.
Computing power data has already reflected this point. Network computing power peaked at about 1,160 EH/s in early October 2025, and then declined to about 920 EH/s, experiencing three consecutive negative difficulty adjustments—this is the first such occurrence 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 revenue for the next 12 months. Pure mining companies only trade at 5.9 times. The market has paid over a two-fold premium for AI exposure, further reinforcing the motivation to transform.
The geographical landscape is also changing. The United States, China, and Russia currently control about 68% of the global computing power. Just in Q4 alone, the U.S. increased its market share by about 2 percentage points. Emerging markets are also entering the fray—Paraguay and Ethiopia have joined the top ten mining countries globally, driven by HIVE’s 300 megawatts and Bitdeer’s 40 megawatts facilities.
Computing Power Forecast
CoinShares predicts that network computing power will reach 1.8 ZH/s by the end of 2026, and 2 ZH/s by the end of March 2027 (one month later than previously forecasted).
However, this forecast assumes that Bitcoin returns to $100,000 by the end of the year. If prices remain below $80,000, CoinShares pre-calculates that hash prices will continue to decline, computing power will further decrease, and more miners will exit. Sustained drops below $70,000 could trigger larger-scale capitulation—ironically, this would benefit the survivors through reduced difficulty.
A new generation of hardware offers a potential lifeline. Bitmain’s S23 series and Bitdeer’s self-developed SEALMINER A3 both have energy efficiency below 10 joules/TH, with large-scale shipments expected in the first half of 2026. These mining rigs can roughly halve the energy cost per Bitcoin compared to currently mainstream mid-sized rigs. However, deploying them requires funding—while many miners are investing in AI.
The Bitcoin mining industry at the start of this cycle comprised companies that protected 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 change? 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, which has been core for the past decade, will continue to disappear into something entirely different.
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