Miner Transition to the AI Wave: The Turning Point for the Bitcoin Mining Industry

Profit Dilemma Spurs the Path to Change

Bitcoin price hovers around $87.69K, but the mining industry faces an unprecedented profit crisis. Hash price has fallen to $39.4/PH/s/day, below most miners’ break-even point of $40, meaning that even with the network hashrate surpassing 1 Zettahash, listed mining companies’ gross margins continue to shrink.

According to the latest data, the average cost for Q4 miners has surged to $137,800 per Bitcoin, with some publicly listed miners even experiencing negative gross margins. In the face of this “Crypto winter,” small and medium-sized miners are hit hardest; many have begun reducing operation frequencies to save electricity costs, causing the network hashrate to drop by 8%.

From Hashpower to AI: The Second Spring of Mining Infrastructure

Large-scale power contracts, data centers, and cooling systems owned by Bitcoin miners—assets originally focused on mining—are now becoming natural advantages for transitioning into AI/high-performance computing (HPC). Several mining companies have signed long-term contracts with tech giants like Google and Microsoft, expected to generate billions of dollars in stable revenue.

Notable transformation cases:

Core Scientific’s Q3 revenue from HPC/AI has reached 21%, making it a pioneer in transition. TeraWulf is more aggressive, prioritizing shifting electricity to AI computing, even sacrificing some Bitcoin mining capacity. Iris Energy (IREN), although AI business currently accounts for only 3% of revenue, saw its stock price increase over 4 times this year, reflecting investor enthusiasm for miners’ AI transition.

Bitfarms has the most aggressive plan, pledging to gradually exit Bitcoin mining by 2027 and fully shift to AI data centers. It has completely transformed its Washington state facility into an NVIDIA GPU-supported HPC center. Cipher Mining aims to expand to 1.7GW capacity by 2026, focusing on AI support services, with JPMorgan recently upgrading its rating to “Overweight.”

Ethan Vera, CEO of Luxor Technology, stated directly that miners are actively “pulling out” Bitcoin machines to supply AI data centers, and this trend will accelerate further. Galaxy Digital’s analysis indicates that AI/HPC businesses offer more stable, predictable cash flow through long-term contracts. Compared to Bitcoin’s high volatility, their valuation is more attractive—data center operators are often valued at 20 to 25 times earnings. Investors are shifting focus, and miner stocks are beginning to decouple from Bitcoin, even rising against the trend.

Renewable Energy Becomes the Core of Competitiveness

With rising energy costs and increasing ESG demands, miners are turning to renewable energy sources. Sangha Renewables launched a 20MW solar mining facility in Ector County, Texas; Phoenix Group launched a 30MW hydropower operation in Ethiopia; Canaan partnered with Soluna to deploy wind power in Briscoe County, Texas, and develop adaptive mining machines optimized for AI energy efficiency.

Cambridge’s latest research shows that by 2025, over 52.4% of global Bitcoin mining energy will come from renewable sources (wind/hydro at 42.6%, nuclear at 9.8%), a significant increase from 2022. By leveraging abundant renewable resources in Texas, Iceland, and Canada, miners are achieving near-zero carbon footprints. This not only reduces electricity costs (a major expense in mining) but also responds to regulatory and investor ESG requirements. Compared to Tether, which was forced to shut down its Uruguay facility due to rising energy prices, miners proactively embracing renewable energy are building long-term competitive advantages.

Market Segmentation: The Era of Survival of the Fittest

TheMinerMag analyst Wolfie Zhao warns that U.S.-listed miners are losing market share due to international competition, and heavily indebted operators face severe Q4 challenges. However, successful transition miners like IREN, Cipher, and CleanSpark are gaining favor from institutions such as JPMorgan and Needham, with target prices continuously raised. The overall industry is expected to see a 35% HPC transition rate by 2026, with a potential market size reaching hundreds of billions of dollars.

For investors using Yen wallets or other digital asset management tools, this industry transition is also an important opportunity to observe—those miners who successfully leverage their electricity and land advantages for the AI revolution will become the next winners. This process is gradually becoming a key indicator of whether the Bitcoin ecosystem is maturing.