Author: Shaurya Malwa
Compiled by: Deep Tide TechFlow
Deep Tide Guide: The latest mining report from CoinShares shows that the weighted average cost for 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—resulting in a loss of $19,000 per coin 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 collectively sold over 15,000 BTC, and companies like IREN and TeraWulf have taken on tens of billions of dollars in debt. By the end of 2026, AI revenue may account for up to 70% of some mining companies' income. They are transitioning from Bitcoin miners to data center operators that happen to still mine. The core contradiction is: the companies selling Bitcoin to transition to AI are the same ones that secure the Bitcoin network. The hash rate has dropped from a peak of 1,160 EH/s to about 920 EH/s.
- The Bitcoin mining industry is experiencing its most fundamental transformation since its inception, and the clearest signal is not the hash rate or difficulty adjustment, 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 in Q4 2025 rose to about $79,995.
- Bitcoin has been trading in the $68,000–$70,000 range, and a CoinDesk report last week estimated a loss of about $19,000 per BTC mined.
- This number is unsustainable, and the industry knows it. The response is a full-scale shift to AI infrastructure—which is reshaping the essence of these companies.
According to the CoinShares report, listed 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 secured $12.8 billion in HPC contract revenue. Hut 8 signed a $7 billion, 15-year AI infrastructure lease at its River Bend campus. Cipher Digital signed a multi-billion dollar agreement with Google-backed Fluidstack.
By the end of 2026, AI revenue could account for up to 70% of listed mining companies' income, compared to about 30% now. Core Scientific's AI hosting revenue already makes up 39% of its total revenue. TeraWulf is at 27%. IREN is currently at 9% but is rapidly expanding, with 200 megawatts of liquid-cooled GPU computing capacity under construction.
This means these mining companies are increasingly resembling data center operators that happen to still mine Bitcoin.
The economics explain why. CoinShares data shows that Bitcoin mining infrastructure costs about $700,000–$1 million per megawatt, while AI infrastructure costs about $8–$15 million per megawatt. The gap is significant, but AI offers structurally higher and more stable returns.
Hash price—a metric measuring miners' revenue per unit of computing power—fell to a post-halving all-time low in early March, around $28–$30/PH/day.
At this level, miners using mid-generation machines need electricity prices below $0.05/kWh to remain cash-flow positive. In contrast, AI infrastructure contracts promise profit margins exceeding 85%, with multi-year guaranteed revenue visibility.
Where Is the Money for the Transition Coming From?
The CoinShares report points out that there are two sources of funding for this transition, both clearly visible in the data.
First, debt. Leverage across the industry has qualitatively changed. IREN now carries $3.7 billion in convertible notes across five series. TeraWulf has total debt of $5.7 billion, consisting of convertible bonds and priority guaranteed notes from its computing power subsidiary.
Cipher Digital issued $1.7 billion in priority guaranteed notes in November, causing its quarterly interest expense to soar from $3.2 million in the first nine months to $33.4 million in Q4 alone. This is not a mining-level debt burden; it's an infrastructure-level bet—wagering that AI revenue will come fast enough to cover debt obligations.
Second, selling Bitcoin. Listed mining companies have collectively sold over 15,000 BTC from their peak holdings. 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 holdings in February. Riot Platforms sold 1,818 BTC (worth $162 million) in December.
Even the largest listed holder, Marathon (holding 53,822 BTC), quietly expanded its policy in its March 10-K annual report, authorizing sales from its entire balance sheet reserves. Part of the reason is pressure from its $350 million Bitcoin-collateralized credit facility—as the price fell toward $68,000, the loan-to-value (LTV) ratio climbed to 87%.
Who Will Protect the Bitcoin Network?
The companies selling Bitcoin to fund AI are precisely those whose mining operations secure the Bitcoin network. This constitutes the core contradiction of this transition. When mining is unprofitable and AI is profitable, the rational economic decision is to shift capital away from mining. But if enough miners do this, the network's security budget shrinks.
Hash rate data already reflects this. The network hash rate peaked at about 1,160 EH/s in early October 2025 and has since declined to about 920 EH/s, with three consecutive negative difficulty adjustments—the first since July 2022.
Valuation Divergence
The market has already priced in this divergence. Mining companies with signed HPC contracts currently trade at 12.3 times their revenue for the next 12 months. Pure mining companies trade at only 5.9 times. The market is paying a premium of over twice for AI exposure, further reinforcing the incentive to transition.
The geographical landscape is also changing. The US, China, and Russia currently control about 68% of the global hash rate. In Q4 alone, the US increased its market share by about 2 percentage points. But emerging markets are also entering the fray—Paraguay and Ethiopia have entered the top ten global mining countries, driven by HIVE's 300-megawatt facility and Bitdeer's 40-megawatt facility, respectively.
Hash Rate Forecast
CoinShares predicts the network hash rate 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 previous forecasts).
But this prediction assumes Bitcoin returns to $100,000 by year-end. If the price remains below $80,000, CoinShares forecasts the hash price will continue to fall, the hash rate will decline further, and more miners will exit. A sustained drop below $70,000 could trigger larger-scale capitulation—ironically, this would benefit survivors by lowering the difficulty.
New-generation hardware offers a potential way out. Bitmain's S23 series and Bitdeer's self-developed SEALMINER A3 both have energy efficiency below 10 joules/TH and are expected to ship in large volumes in the first half of 2026. These miners can roughly halve the energy cost per Bitcoin compared to current mainstream mid-generation models. But deploying them requires capital—and many miners are putting their money into AI.
The Bitcoin mining industry began this cycle as a group of companies protecting the network and hoarding Bitcoin. It is exiting this cycle as something else: a group of companies building AI data centers and selling Bitcoin to fund it.
Is this a temporary response to unfavorable economic conditions 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 transition slows. If it stays at $70,000 or lower, the transition accelerates, and the mining industry, which has been centered on mining for 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
