Bitcoin mining industry’s life and death line: Hashrate shifts to AI, renewable energy becomes a lifeline

Bitcoin miners are standing at a crossroads. As BTC prices hover around $87.60K, the Hash Price has fallen to a historic low of $39.4/PH/s/day, and the gross profit margins of many small and medium-sized mining companies have dropped to zero, with some publicly listed miners even incurring losses. This “mining dilemma” is forcing the entire industry to accelerate its transition—from pure Bitcoin mining to AI data center operations, while also seizing the benefits of renewable energy.

Miners’ Dilemma: Excess Hashrate, Out-of-Control Costs

In Q4 of this year, miners are not having an easy time. Although the network hashrate has reached a new high of over 1 Zettahash, this has become a problem—the more intense the competition, the thinner the returns per unit of hashrate. Most mining companies set their breakeven point at $40/PH/s/day, but the Hash Price is now hovering below this line, meaning every extra second of operation results in more losses.

Worse still, three major cost pressures—financing costs, equipment depreciation, and electricity expenses—are weighing down on miners. In a high-interest-rate environment, borrowing becomes more expensive; the rapid iteration of new-generation chips causes old equipment to depreciate quickly; electricity costs are the largest component of mining expenses. Under these combined factors, the average cost per Bitcoin for miners has risen to $137,800, far exceeding the current market price and net profit margins.

Some operators have started reducing their machine operation frequency to save power, leading to an 8% drop in network hashrate—an obvious signal that the industry is in trouble.

AI Revolution: Lucrative Opportunities in Data Centers

While miners are in trouble, a new opportunity has suddenly emerged—the explosive growth in AI computing demand.

This is a gift for miners. Bitcoin miners already possess the core assets needed to build AI data centers: large-scale stable power supply contracts, professional-grade data center infrastructure, and mature cooling systems. These assets are almost perfectly suited for deploying NVIDIA GPU clusters and supporting the power and cooling needs of generative AI training.

Even better, more tech giants are willing to sign long-term, stable AI service contracts with miners. Companies like Google and Microsoft urgently need external computing resources, turning miners’ infrastructure into hot commodities. It is estimated that such contracts could bring miners hundreds of millions to billions of dollars in stable revenue.

The industry has already seen real-world examples of this shift:

Core Scientific in Q3, 21% of revenue came from HPC/AI business, with rapid growth.

Bitfarms is more aggressive—they plan to fully exit Bitcoin mining by 2027, transforming their Washington state facilities into high-performance computing centers supported by NVIDIA GPUs, betting on AI as the future.

Cipher Mining has set a goal to expand hashrate to 1.7GW by 2026, focusing heavily on AI services. JPMorgan recently upgraded its rating to “Overweight,” and analysts are now evaluating these miners’ transformations using data center valuation logic (typically 20-25 times P/E ratio).

TeraWulf is prioritizing shifting its power resources to AI computing, even sacrificing some mining capacity to free up resources.

Interestingly, although these miners’ AI businesses currently account for a small portion of total revenue, investor sentiment has already shifted. Miner stocks are beginning to decouple from Bitcoin price fluctuations, even rising counter to BTC sideways movement—reflecting market enthusiasm for the “AI transition story.”

Luxor Technology CEO Ethan Vera observed a trend: miners are actively “pulling out” Bitcoin mining machines, reallocating that hashrate and electricity to run AI computing tasks. He believes this wave will accelerate further.

Renewable Energy Battle: Cost Reduction and ESG Boosts

Alongside the transition to AI, miners are also playing another card—renewable energy.

Low-cost renewable energy is a double benefit. Economically, wind, hydro, and solar power have extremely low marginal costs, especially in resource-rich areas like Texas, Iceland, and Canada; from an ESG perspective, operating data centers with renewable energy can significantly improve corporate ratings amid the ESG investment trend.

Miners are already taking action:

Sangha Renewables in Texas’s Ector County has launched a 20MW solar mining facility, directly converting sunlight into Bitcoin.

Phoenix Group has moved to Ethiopia, utilizing abundant hydropower resources to start a 30MW hydro mining operation.

Canaan partnered with Soluna to deploy wind power facilities in Texas, while developing AI-optimized adaptive mining hardware to maximize energy efficiency.

According to the latest Cambridge research, by 2025, over 52.4% of global Bitcoin mining energy consumption will come from renewable sources (including 42.6% from wind/hydro and 9.8% from nuclear), a significant increase from 2022. This indicates that miners are already migrating en masse to regions with concentrated renewable energy.

This transition has a tangible impact on business: electricity costs typically account for 40-60% of total mining expenses. Proximity to renewable energy and signing long-term low-cost contracts can fundamentally improve cost structures. It also helps miners avoid risks like Tether—last year, Uruguay was forced to shut down mining facilities due to soaring energy prices, serving as a cautionary tale within the industry.

Winners Emerge: Successful Transitions Drive Stock Price Surge

As this industry reshuffle unfolds, the market is making its choices.

Miners who successfully transition are favored by institutional investors. Iris Energy (IREN) has seen its stock price surge over 4 times this year; JPMorgan has upgraded Cipher Mining’s rating; companies like CleanSpark are also attracting investor attention—they share a proactive embrace of AI and renewable energy transition.

Conversely, small and medium miners still clinging to Bitcoin mining, burdened with debt and lacking cost advantages, face elimination pressure. TheMinerMag analyst Wolfie Zhao warned that the market share of US-listed miners is being eroded by foreign competitors, and these struggling players face a “very grim” outlook before Q4.

Overall, the HPC/AI transition rate is expected to reach 35% by 2026, with a market potential worth hundreds of billions of dollars. This is a classic transition dividend period—those who respond quickly, have ample capital, and can access low-cost renewable energy will significantly capture market share.

Conclusion: Industry Turning Point Has Arrived

Bitcoin miners are experiencing a brutal淘汰赛. Skyrocketing costs and intensifying competition have made Bitcoin mining no longer a high-profit industry, and shifting toward AI data center services and renewable energy optimization has become the way to survive.

The ultimate winners will be those who can leverage their years of accumulated power resources and infrastructure advantages to successfully transition into AI computing and green energy sectors. For the entire crypto ecosystem, this transition also signals an important development—Bitcoin industry is evolving toward a more mature, rational, and sustainable future.