Bitcoin Miners Pivot to AI as Production Costs Keep Climbing
- CoinShares says rising costs are now driving public bitcoin miners toward AI revenue.
- Lower hash price and shrinking margins now strain mining balance sheets further.
- Bitcoin sales and larger debt loads now finance a broader pivot into AI data hubs.
Public Bitcoin miners are moving into AI infrastructure as mining costs rise above market prices, according to CoinShares’ Q1 2026 mining report. The report said the weighted average cash cost reached about $79,995 per bitcoin in Q4 2025. CoinDesk also estimated losses near $19,000 per BTC mined last week while bitcoin traded between $68,000 and $70,000.
AI contracts redraw the sector
CoinShares said the public mining sector has announced more than $70 billion in cumulative AI and high-performance computing contracts. Core Scientific’s expanded agreement with CoreWeave alone carries a $10.2 billion value over 12 years.
TeraWulf has secured $12.8 billion in contracted HPC revenue. Hut 8 also signed a $7 billion, 15-year lease for AI infrastructure at its River Bend campus. In parallel, Cipher Digital reached a multi-billion-dollar deal with Google-backed Fluidstack.
CoinShares said listed miners could derive as much as 70% of revenue from AI by the end of 2026, up from about 30% today. Core Scientific already gets 39% of total revenue from AI colocation. TeraWulf stands at 27%, while IREN is at 9% and expanding with up to 200 megawatts of liquid-cooled GPU capacity.
The economics now drive that shift. CoinShares placed bitcoin mining infrastructure at roughly $700,000 to $1 million per megawatt. By contrast, AI infrastructure costs about $8 million to $15 million per megawatt, yet it offers higher and steadier returns. At the same time, hash price fell to about $28 to $30 per petahash per day in early March.
Debt rises as bitcoin holdings fall
CoinShares said miners are financing the transition through debt and bitcoin sales. IREN now carries $3.7 billion in convertible notes across five series. TeraWulf holds $5.7 billion in total debt through convertible notes and senior secured notes at its compute subsidiary.
Cipher Digital issued $1.7 billion in senior secured notes in November. As a result, its quarterly interest expense jumped from $3.2 million for the first nine months to $33.4 million in Q4 alone. Those debt loads now resemble large infrastructure projects rather than traditional mining operations.
Miners are also shrinking treasury positions. CoinShares said public miners have reduced BTC treasuries by more than 15,000 BTC from peak levels. Core Scientific sold about 1,900 BTC worth $175 million in January and planned to liquidate substantially all remaining holdings in Q1 2026.
Bitdeer reduced its treasury to zero in February. Riot Platforms sold 1,818 BTC worth $162 million in December. Marathon, the largest public holder with 53,822 BTC, also widened its March 10-K policy to allow sales from its full reserve as pressure rose on its $350 million bitcoin-backed credit facility.
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Hashrate slips while valuations diverge
That shift creates a clear tension. The same companies that secure the bitcoin network are selling bitcoin and redirecting capital into AI. What happens to Bitcoin’s security budget if that migration keeps accelerating?
The network hashrate already reflects strain. CoinShares said it peaked near 1,160 exahashes per second in early October 2025 and later fell to about 920 EH/s. The network also recorded three straight negative difficulty adjustments, the first such run since July 2022.
Markets have priced the split. Miners with secured HPC contracts now trade at 12.3 times next-twelve-month sales. Pure-play miners trade at 5.9 times. That gap gives companies another reason to deepen AI exposure.
Meanwhile, mining geography keeps changing. The United States, China, and Russia now control about 68% of global hashrate, while the U.S. gained roughly two percentage points in Q4. Paraguay and Ethiopia also entered the global top 10 through HIVE’s 300-megawatt Paraguay operation and Bitdeer’s 40-megawatt Ethiopia facility.
CoinShares now forecasts hashrate could reach 1.8 zetahashes by the end of 2026 and 2 zetahashes by the end of March 2027. Still, that path depends on bitcoin recovering to $100,000 by year-end. If prices stay below $80,000, CoinShares expects lower hash price, deeper hashrate pressure, and more miner exits as next-generation machines such as Bitmain’s S23 series and Bitdeer’s SEALMINER A3 roll out.
