Why are Bitcoin miners collectively turning to AI? The reasons behind it are shocking.

This article is written by Tiger Research and discusses how the big dump in Bitcoin prices has forced miners to change their business model.

Key Points

• Unstable income and the rising costs of Bitcoin mining have made the core business of crypto mining companies unstable.
• Therefore, crypto miners are transforming by renting out data center space in existing mining facilities to large technology companies.
• This move has reduced intense competition, making the industry more robust.

1. Business Risks Faced by Crypto Miners

We previously analyzed the financial risks that the fall in Bitcoin prices poses to Digital Asset Treasury (DAT) reserve companies. However, it is not only DAT companies that are under pressure. Bitcoin mining companies that directly operate mining businesses also face significant risks.

The vulnerability of mining companies stems from their simply structured business model. Revenue almost entirely depends on the price of Bitcoin, which is inherently unpredictable. In contrast, costs often rise over time.

• Income is unpredictable: The company's revenue completely depends on the Bitcoin market price.
• Structural costs rising: Mining difficulty continues to increase, electricity prices are rising, and hardware needs to be replaced regularly.

This structure is particularly problematic during periods of Bitcoin price fall. Revenue drops immediately, while costs continue to rise. Mining companies find themselves in a double bind.

Regulatory risks have added another layer of uncertainty. New York State in the United States has proposed a plan to raise the consumption tax on mining companies. Currently, most large cryptocurrency miners are located in areas like Texas, where regulations are relatively lenient, so the impact is limited in the short term. Nevertheless, the risks posed by broader regulatory pressures cannot be ignored.

Against this backdrop, mining companies face a fundamental question: can this business model maintain its viability in the long term?

2. The structural vulnerability of crypto mining enterprises

So far, the average cost of mining one Bitcoin is about $74,600, which is an increase of nearly 30% compared to a year ago. When considering factors such as depreciation and equity incentives, the total production cost per Bitcoin will rise to about $130,000.

The current trading price of Bitcoin is approximately $90,000, which means that mining companies incur an approximate book loss of $46,000 for each Bitcoin mined. This gap highlights the increasing disconnect between operating costs and market prices.

As time goes by, the situation becomes more fragile. Compared to 2022, the mining difficulty in 2025 has significantly increased, while energy regulations in multiple regions are also tightening. These factors reduce the predictability of costs and lead to a decline in the structural stability of mining operations.

3. Shift to Artificial Intelligence Data Center Leasing

As the competition in the field of artificial intelligence becomes increasingly intense, the demand for data centers from large technology companies has also risen sharply. However, building new data centers takes years. In AI competitions measured in months or quarters, waiting is unacceptable.

Mining companies have discovered the opportunities brought by this market gap. The facilities they currently operate are equipped with high-performance computing hardware, large-scale power supply, and advanced cooling systems. Although these facilities cannot be completely transformed overnight, their specifications align closely with the needs of large tech companies. This enables them to relatively quickly transform into artificial intelligence data centers.

• High-performance GPU: Cryptocurrency mining companies operate large GPU clusters, which can be repurposed for artificial intelligence computations. NVIDIA GPUs are a common example. By adjusting the facilities, these assets can support new revenue streams beyond mining.
• Power Infrastructure: Mining companies have gained access to hundreds of megawatts of grid connection. In a heavily regulated electricity market, this level of access is rare and difficult to replicate, even with funding.
• Cooling System: The experience accumulated from the operation of ASIC miners can be well applied to manage high-heat AI servers such as the H100 and H200. In fact, many mining farms can be transformed into AI data centers within six to twelve months.

Core Scientific is a typical example. The company faced bankruptcy risk in 2022 but successfully transformed and entered the artificial intelligence data center operation field. Currently, the company operates approximately 200 megawatts of data center capacity and plans to gradually expand to 500 megawatts. This transformation from a struggling Miner company to a data center leasing enterprise fully illustrates how the utilization of alternative infrastructure can help businesses stabilize and grow.

Other mining companies are also following a similar model. IREN and TeraWulf are also expanding into areas beyond their core mining operations. Although they have not fully transformed into data center leasing companies, they are developing supplementary business models outside of Bitcoin mining.

These measures reflect a broader trend. As the profitability of mining declines, cryptocurrency mining companies are seeking business models that are better suited to the era of artificial intelligence. This shift is more out of necessity than out of growth ambition.

4. Diversification Strategies for Cryptocurrency Miners

The shift of cryptocurrency mining companies from unprofitable mining operations to artificial intelligence data center businesses is not a temporary trend, but rather reflects a rational survival strategy aimed at reallocating capital to more efficient uses.

This transformation should not be seen as a negative development. On the contrary, it helps mining companies establish a more stable cash flow. With more stable income, companies can continue to hold Bitcoin without being forced to sell at low prices.

Another option is far from this. Companies with a continuous negative cash flow face bankruptcy risks and are often forced to sell Bitcoin at unfavorable prices. In contrast, data center revenues allow mining companies to flexibly hold or sell Bitcoin, enabling strategic trading. This is more beneficial for both the companies and the entire market.

Not all companies focus solely on pure data center leasing. Some companies, such as Bitmine and Cathedra Bitcoin, are expanding their business into DAT-style business models beyond mining.

In summary, these changes indicate that the cryptocurrency mining industry is maturing. Weaker participants are exiting the market or transforming, alleviating the pressure on mining. At the same time, leading companies are also evolving from simple mining operations to diversified DAT businesses.

In fact, the weaker links are being eliminated, and the overall market structure is becoming more resilient.

(The above content is excerpted and reprinted with the authorization of partner PANews, original link | Source: Tiger Research__)

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Disclaimer: This article is for providing market information only. All content and opinions are for reference only and do not constitute investment advice, nor do they represent the views and positions of Odaily. Investors should make their own decisions and trades, and the author and Odaily will not bear any responsibility for any direct or indirect losses arising from investors' trades. _

Tags: AIGPUTiger Research Artificial Intelligence Cryptocurrency Mining Bitcoin Miner Data Center