If you're one of the regular readers of this newsletter, you're well aware that I often talk about the increasing number of bitcoin mining companies shifting to AI operations. Why am I so obsessed with this topic, some of you might ask? Because it has major implications for both blockchain and AI, and, as it turns out, to the wider economy as well.
I've covered numerous miners pivoting to AI: Cango Inc., Cipher Mining-LA, Hut8, TeraWulf, Core Scientific, IREN, and more. Some of them have abandoned BTC mining altogether, while others maintain some mining capacity. In any case, almost all of them seem to be profiting from the move. As Yahoo Finance reports:
Jefferies analysts launched ratings on five companies transitioning from cryptocurrency mining into AI-focused data center development. The firm assigned Buy ratings to Cipher Mining Inc (NASDAQ:CIFR), Hut 8 Corp (NASDAQ:HUT), Terawulf Inc (NASDAQ:WULF), and Core Scientific Inc (NASDAQ:CORZ), while initiating Riot Platforms, Inc. (NASDAQ:RIOT) with a Hold rating.
The analysts were particularly positive on Cipher Digital and Hut 8, citing their relationships with hyperscalers and Google-backed cloud provider Fluidstack. Meanwhile, Core Scientific was praised for already delivering 243 MW of AI infrastructure capacity, the highest among peers.
Today, I'm (re-)exploring this topic, because this major shift is far from over. With the ever-growing demand for AI compute resources, far outpacing the supply, and the shrinking economics of bitcoin mining, it is to be expected that more mining companies would follow suit. And they have.
Last month, publicly traded bitcoin miner HIVE Digital Technologies offered $75M in 0% exchangeable senior notes due 2031 to fund GPU purchases and data center expansion. Just yesterday, the company unveiled a 320MW 'AI gigafactory' project in Toronto, Canada.
"AI is the new industrial base and compute is the factory floor," Executive Chairman Frank Holmes said in the announcement. "Canada produced the Godfathers of deep learning, but kept renting the factories. That era is over."
HIVE stock rallies 35% after unveiling 320MW 'AI gigafactory' project in Toronto
Hive Digital Executive Chair Frank Holmes said the facility could eventually support more than 100,000 GPUs.
At the same time:
In March, the company said it was working to wind down ASIC bitcoin mining at its Boden, Sweden, facility to convert it into an AI-focused data center. Around the same time, the company also began deploying GPU clusters in Asunción, Paraguay.
Meanwhile, it became clear that MARA sold about $1.5B in bitcoin during Q1 of 2026, unloading roughly 20,880 BTC to reduce debt and fund a shift toward AI infrastructure and energy assets.
The company reported first-quarter revenue of $174.6 million, an 18% drop from a year earlier, and a net loss of about $1.3 billion. Management tied that result to a roughly $1 billion negative change in the fair value of its digital assets after a double-digit slide in the bitcoin price over the period.
MARA says it is pivoting from being mainly a Bitcoin miner toward operating AI data centers, high-performance computing facilities, and power infrastructure, including a planned acquisition of the Long Ridge Energy campus in Ohio.
Just a couple of days ago, IREN completed a $3B convertible note offering, "after strong investor demand drove the deal size up from an initially proposed $2B". The notes mature in 2033 with a 1% coupon, and most of the proceeds will go toward general corporate and infrastructure expansion purposes.
The company is using the capital to support large-scale AI projects and previously announced AI hosting agreements, as it continues shifting away from being primarily a Bitcoin miner.
The company recently signed a five-year, $3.4 billion AI cloud agreement with NVIDIA and plans to purchase around $3.5 billion of GPUs and related equipment from Dell Technologies.
IREN Raises $3B in Convertible Notes to Fund AI Cloud Expansion | KuCoin
Headline: IREN Raises $3B in Convertible Notes as Microsoft and Nvidia Deals Fuel AI Cloud Push IREN has closed a $3.0 billion convertible senior notes offerin
As a Wintermute report explained back in March, the current mining cycle is structurally different from prior ones in 2018 and 2022, and miners have to reinvent themselves into treasury and infrastructure managers in order to survive.
On a rolling four‑year basis, Bitcoin has only returned about 1.15x in this epoch, far below the 10x–20x multiples seen in earlier cycles.
In past cycles, huge price gains covered up a lot of problems. Miners could count on bull markets to bail out weak margins after each halving.
Today, with institutions, ETFs, and corporate treasuries in the mix, Bitcoin trades more like a mainstream macro asset, and those explosive 20x runs are less likely.
For miners that built their business on the assumption of permanent hypergrowth, Wintermute frames this as a regime change, not a bad quarter.
In fact, according to a CoinShares report cited by CoinDesk (linked below), in late 2025 the average miner didn't even reach break-even, but actually suffered serious losses:
[...] the weighted average cash cost to produce one bitcoin among publicly listed miners rose to approximately $79,995 in Q4 2025. Bitcoin has traded in the $68,000 to $70,000 band, with a CoinDesk report last week estimating losses of $19,000 per BTC mined.
In such a context, the shift to AI operations is a natural step, especially given that well-funded AI labs like OpenAI and Anthropic are prepared, even eager, to pay a higher price for compute resources now, instead of waiting years for new capacity construction:
Wintermute points out that sites once valued at roughly 1–7 dollars per watt as pure mining operations have changed hands at close to 18 dollars per watt after being repositioned for AI compute, helped by deals like HUT’s work with Google and Anthropic.
The amount of money currently being poured into AI compute capacity is so spectacular, that miners are willing to do almost anything to make the transition:
Over $70 billion in cumulative AI and high-performance computing contracts have now been announced across the public mining sector, according to the CoinShares report. CoreWeave's expanded deal with Core Scientific alone is worth $10.2 billion over 12 years. TeraWulf has $12.8 billion in contracted HPC revenue. Hut 8 signed a $7 billion, 15-year lease for AI infrastructure at its River Bend campus. Cipher Digital has a multi-billion-dollar agreement with Google-backed Fluidstack.
Though, Wintermute predicted that such a pivot won't be equally profitable for all miners that make it. The ones that have good location and access to cheap power, and already control built-out sites will benefit, but the rest will have to look for other ways to get by.
When I say miners would do literally everything to fund their pivot, I'm implying that they would even harm their own bottom line. Here's what I mean.
Miners are funding their AI transformation in two main ways - as you saw above, the first one involves issuing additional debt. However, the second one consists of dumping huge chunks of their BTC reserves, thus creating additional pressure on the price of the asset - the one variable their entire business depends on:
Publicly listed miners have collectively reduced their BTC treasuries by over 15,000 BTC* from peak levels. Core Scientific sold roughly 1,900 BTC worth $175 million in January and is planning to liquidate substantially all remaining holdings in Q1 2026. Bitdeer (NASDAQ: BTDR) reduced its treasury to zero in February. Riot Platforms, Inc. sold 1,818 BTC worth $162 million in December.
(*This estimation does not include the above-mentioned 20K+ BTC sold by MARA)
For years, miners have stuck to the "HODL" philosophy and relied on the (hyper-)appreciation of bitcoin in order to cover expenses, debt interest payments, and growth. Instead, as Wintermute suggested, they could have used their reserves more actively through lending or derivatives strategies to generate yield and improve liquidity.
To be honest, I've been following this topic so closely, mainly because the withdrawal of miners creates serious risks for the security of the network - when operators responsible for validating transactions become fewer and fewer, naturally, the concentration of power over the blockchain increases.
Fortunately, the genius of Satoshi Nakamoto anticipated such a scenario and has designed the system to adapt:
The hashrate data already reflects this. The network peaked at approximately 1,160 exahashes per second in early October 2025 and has since declined to roughly 920 EH/s, with three consecutive negative difficulty adjustments, the first such streak since July 2022.
The decreasing difficulty parameter allows smaller actors to enter the market and thereby diversify control of the network.
The geographic picture is shifting alongside the economics, meanwhile. The United States, China, and Russia now control roughly 68% of global hashrate. The U.S. gained about 2 percentage points of market share in Q4 alone.
But emerging markets are entering the picture. Paraguay and Ethiopia have joined the global top 10 mining countries, driven by HIVE's 300-megawatt operation in Paraguay and Bitdeer's 40-megawatt facility in Ethiopia.
What will happen next depends on many different factors, including macroeconomics, wars, and the alleged AI bubble bursting, because they'd all have an impact on the BTC price:
Whether that's a temporary response to unfavorable economics or a permanent structural shift depends on one variable: the price of bitcoin. If it returns to $100,000, mining margins recover and the AI pivot slows. If it stays at $70,000 or below, the transition accelerates and the mining sector as it existed for the past decade continues to disappear into something else entirely.
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