Author: Shaurya Malwa
Compiled by: TechFlow TechFlow
TechFlow Dive: CoinShares' latest mining report shows that the weighted average cost of mining one Bitcoin for listed mining companies has risen to about $80,000, while the current price of BTC is between $68,000 and $70,000—meaning a loss of $19,000 for every Bitcoin mined.
The industry is undergoing its most fundamental transformation since its inception: over $70 billion in AI/HPC contracts have been signed, listed mining companies have sold over 15,000 BTC, and companies like IREN and TeraWulf have saddled themselves with billions of dollars in debt. By the end of 2026, AI revenue may account for 70% of some mining companies' income. They are transforming from Bitcoin miners into data center operators who happen to still be mining. The core contradiction is that those companies that are selling Bitcoin and transitioning to AI are precisely the ones that ensure the security of the Bitcoin network, whose hashrate has fallen from a peak of 1,160 EH/s to approximately 920 EH/s.
- The Bitcoin mining industry is undergoing its most fundamental transformation since its inception, and the clearest signal is not the adjustment of computing power or difficulty, but the balance sheet.
- CoinShares' Q1 2026 mining report released this week shows that the weighted average cash cost for listed mining companies to mine one Bitcoin rose to approximately $79,995 in Q4 2025.
- Bitcoin has been trading in the $68,000-$70,000 range, and a report from CoinDesk last week estimated that mining one BTC would result in a loss of approximately $19,000.
- This number is unsustainable, and the industry knows it. The response is a full-scale shift to AI infrastructure—which is reshaping the very nature of these companies.
According to a CoinShares report, publicly traded mining companies have collectively announced over $70 billion in AI and high-performance computing (HPC) contracts. CoreWeave's expanded agreement with Core Scientific is worth $10.2 billion over 12 years. TeraWulf has signed HPC contract revenue of $12.8 billion. Hut 8 signed a $7 billion, 15-year AI infrastructure lease at its River Bend campus. Cipher Digital signed a multi-billion dollar deal with Fluidstack, a Google-backed company.
By the end of 2026, AI revenue for listed mining companies may account for as much as 70%, compared to about 30% currently. Core Scientific's AI hosting revenue already accounts for 39% of its total revenue. TeraWulf's is 27%. IREN's is currently 9%, but it is expanding rapidly, with liquid-cooled GPU computing power under construction reaching 200 megawatts.
This means that these mining companies are increasingly resembling data center operators who just happen to be mining Bitcoin.
Economic factors explain the reason. CoinShares data shows that the cost of Bitcoin mining infrastructure is approximately $700,000 to $1 million per megawatt, while AI infrastructure costs approximately $8 million to $15 million per megawatt. The difference is significant, but AI offers more structurally sound and stable returns.
The hash price—a metric that measures a miner’s revenue per unit of hash power—fell to a post-halving low in early March, at approximately $28-30 per hash per day.
At this level, miners using mid-generation mining rigs need electricity prices below $0.05/kWh to maintain cash profitability. In contrast, AI infrastructure contracts promise profit margins exceeding 85% and offer guaranteed revenue for many years.
Where will the money for the transformation come from?
CoinShares' report points out that there are two sources of funding for this transformation, both of which are clearly visible in the data.
First, debt. The leverage level of the entire industry has undergone a qualitative change. IREN is now carrying $3.7 billion in convertible notes, divided into five series. TeraWulf's total debt is $5.7 billion, consisting of convertible bonds and senior secured notes of its computing subsidiary.
Cipher Digital issued $1.7 billion in senior secured notes in November, causing its quarterly interest expense to surge from $3.2 million in the first nine months to $33.4 million in Q4 alone. This isn't mining-level debt; it's an infrastructure-level gamble—betting that AI revenue will quickly cover its debt obligations.
Second, selling cryptocurrency. Listed mining companies have cumulatively reduced their holdings by more than 15,000 BTC from peak levels. Core Scientific sold approximately 1,900 BTC (worth $175 million) in January and plans to liquidate almost all of its remaining holdings in Q1 2026. Bitdeer liquidated its holdings in February. Riot Platforms sold 1,818 BTC (worth $162 million) in December.
Even Marathon, the largest publicly traded holder of Bitcoin (holding 53,822 BTC), quietly expanded its policy in its March 10-K annual report, authorizing sales from its entire balance sheet reserves. This is partly due to pressure on its $350 million Bitcoin-collateralized credit facility—the loan-to-value (LTV) ratio has climbed to 87% as prices have fallen toward $68,000.
Who will protect the Bitcoin network?
Those selling cryptocurrency to fund AI are precisely the companies that operate the mining operations and ensure the security of the Bitcoin network. This constitutes the core contradiction of this transformation. When mining is unprofitable while AI is highly profitable, the rational economic decision is to shift funds away from mining. However, if enough miners do this, the network's security budget will shrink.
The computing power data already reflects this. The network computing power peaked at approximately 1,160 EH/s in early October 2025, and then dropped to approximately 920 EH/s, with three consecutive negative difficulty adjustments – 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 are trading at only 5.9 times. The market is paying more than double the premium for AI exposure, further reinforcing the motivation to transform.
The geographical landscape is also changing. The United States, China, and Russia currently control approximately 68% of global computing power. In Q4 alone, the United States gained about 2 percentage points of market share. But emerging markets are also entering the fray—Paraguay and Ethiopia have entered the top ten mining countries globally, driven by HIVE's 300 MW and Bitdeer's 40 MW facilities, respectively.
Computing power prediction
CoinShares predicts that the network hashrate 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 predicted).
However, this prediction is based on the premise that Bitcoin will return to $100,000 by the end of the year. If the price continues to fall below $80,000, the CoinShares pre-computation power price will continue to decline, the hashrate will decrease further, and more miners will exit. A sustained drop below $70,000 could trigger a larger-scale capitulation-style clearing out—ironically, this would benefit the survivors by reducing the difficulty.
Next-generation hardware offers a potential lifeline. Bitmain's S23 series and Bitdeer's self-developed SEALMINER A3 both boast energy efficiency below 10 joules/th and are expected to ship in large quantities in the first half of 2026. Compared to current mainstream mid-generation models, these mining rigs can roughly halve the energy cost per Bitcoin. However, deploying them requires capital—and many miners are investing in AI.
At the start of this cycle, the Bitcoin mining industry consisted of companies securing the network and accumulating Bitcoin. It is exiting the cycle in a different guise: a group of companies building AI data centers and selling Bitcoin to raise funds.
Is this a temporary response to an unfavorable economic environment or a permanent structural shift? It depends on one variable: the price of Bitcoin. If it returns to $100,000, mining profits recover, and the AI transformation slows. If it stagnates at $70,000 or lower, the transformation accelerates, and the mining industry, centered on mining over the past decade, will continue to disappear into something entirely different.
Original link: https://www.coindesk.com/markets/2026/03/27/bitcoin-miners-are-becoming-ai-companies-and-selling-their-btc-to-fund-the-transition
