Each mining operation loses $19,000 per coin mined as Bitcoin mining companies collectively defect AI

Author: Shaurya Malwa

Compiled by: Deep Tide TechFlow

Deep Tide Introduction: CoinShares’ latest mining report shows that the weighted average cost for publicly traded mining companies to mine one Bitcoin has risen to around $80,000, while the current price of BTC is between $68,000 and $70,000—resulting in a loss of $19,000 for each mined coin.

The industry is undergoing the most fundamental transformation since its inception: over $70 billion in AI/HPC contracts have been signed, publicly traded mining companies have cumulatively sold over 15,000 BTC, and companies like IREN and TeraWulf have taken on tens of billions in debt. By the end of 2026, some mining companies may see AI revenue accounts for 70% of their income. They are evolving from Bitcoin miners to data center operators that happen to still be mining. The core contradiction is: the companies that ensure the security of the Bitcoin network are the same ones transitioning to AI, with hash power having dropped from a peak of 1,160 EH/s to about 920 EH/s.

The Bitcoin mining industry is experiencing the most fundamental transformation since its inception, and the clearest signal is not hash rate or difficulty adjustments, but rather the balance sheets.

CoinShares’ Q1 2026 mining report released this week indicates that the weighted average cash cost for publicly traded mining companies to mine one Bitcoin rose to about $79,995 in Q4 2025.

Bitcoin has been trading in the $68,000 to $70,000 range, and a report from CoinDesk last week estimated a loss of about $19,000 for each mined BTC.

This number is unsustainable, and the industry is well aware of it. The response is a full pivot to AI infrastructure—this is reshaping the essence of these companies.

According to the CoinShares report, publicly traded mining companies have cumulatively announced over $70 billion in AI and high-performance computing (HPC) contracts. CoreWeave’s expanded agreement with Core Scientific is valued at $10.2 billion and spans 12 years. TeraWulf has signed HPC contracts worth $12.8 billion. Hut 8 signed a $7 billion, 15-year lease for AI infrastructure at River Bend Park. Cipher Digital entered into a multi-billion dollar agreement with Fluidstack, which is backed by Google.

By the end of 2026, AI revenue for publicly traded mining companies could account for up to 70%, compared to about 30% currently. Core Scientific’s AI hosting revenue now makes up 39% of total revenue. For TeraWulf, it is 27%. IREN currently stands at 9%, but is rapidly expanding, with an under-construction liquid-cooled GPU capacity of 200 megawatts.

This means these mining companies are increasingly resembling data center operators, just happening to still mine Bitcoin.

The economic rationale explains why. CoinShares data shows that the cost of Bitcoin mining infrastructure is about $700,000 to $1 million per megawatt, while AI infrastructure is about $8 million to $15 million per megawatt. The gap is significant, but AI provides structurally higher and more stable returns.

Hash price—the metric that measures miners’ revenue per unit of hash power—dropped to a historical low of about $28 to $30 per PH per day in early March after the halving.

At this level, miners using mid-generation mining machines need electricity prices below $0.05 per kilowatt-hour to maintain cash profitability. In contrast, AI infrastructure contracts promise profit margins over 85%, with years of visible revenue assurance.

Where does the funding for the transformation come from?

CoinShares’ report points out that there are two sources of funding for this transformation, both clearly visible in the data.

First, leverage. The entire industry’s leverage level has undergone a qualitative change. IREN currently carries $3.7 billion in convertible notes, divided into five series. TeraWulf’s total debt is $5.7 billion, composed of convertible bonds and secured notes from its hash power subsidiary.

Cipher Digital issued $1.7 billion in secured notes in November, causing its quarterly interest expenses to soar from $3.2 million over the previous nine months to $33.4 million in just Q4. This is not a mining-level debt burden; it is an infrastructure-level bet—betting that AI revenue will come fast enough to cover debt obligations.

Second, selling coins. Publicly traded mining companies have cumulatively sold over 15,000 BTC from peak levels. Core Scientific sold about 1,900 BTC (worth $175 million) in January and plans to liquidate nearly all remaining holdings in Q1 2026. Bitdeer cleared its holdings in February. Riot Platforms sold 1,818 BTC (worth $162 million) in December.

Even the largest publicly traded holder Marathon (which holds 53,822 BTC) quietly expanded its policy in its 10-K annual report in March, authorizing sales from its entire balance sheet reserves. Part of the reason is the pressure from its $350 million Bitcoin collateralized credit line— as the price fell to $68,000, the loan-to-value (LTV) ratio climbed to 87%.

Who will protect the Bitcoin network?

The companies selling coins to pivot to AI are precisely those that ensure the security of the Bitcoin network through mining operations. This constitutes the core contradiction of this transformation. When mining is unprofitable and AI is highly profitable, the rational economic decision is to shift funds away from mining. However, if enough miners do this, the budget for network security will shrink.

Hash rate data has already reflected this. The network’s hash rate peaked at about 1,160 EH/s in early October 2025, then dropped to about 920 EH/s, experiencing 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 are currently trading at 12.3 times future 12-month revenue. Pure mining companies are only at 5.9 times. The market has paid over double the premium for AI exposure, further reinforcing the motivation for transformation.

The geographic landscape is also changing. The U.S., China, and Russia currently control about 68% of global hash power. In just Q4, the U.S. 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 mining countries, driven by HIVE’s 300 megawatts and Bitdeer’s 40 megawatts of facilities, respectively.

Hash Rate Forecast

CoinShares predicts that 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 (a month later than previously predicted).

However, this forecast hinges on Bitcoin returning to $100,000 by the end of the year. If prices remain below $80,000, CoinShares estimates that hash prices will continue to decline, and hash power will further decrease, leading to more miners exiting the market. A sustained drop below $70,000 could trigger a larger-scale capitulation—ironically, this could benefit the survivors by lowering difficulty.

A new generation of hardware offers a potential lifeline. Bitmain’s S23 series and Bitdeer’s self-developed SEALMINER A3 both feature energy efficiencies below 10 joules/TH, expected to be shipped in large quantities in the first half of 2026. These mining machines could roughly halve the energy cost per Bitcoin compared to current mainstream mid-generation models. However, deploying them requires capital—and many miners are directing funds toward AI.

At the start of this cycle, the Bitcoin mining industry was composed of companies protecting the network and hoarding Bitcoin. It is exiting this cycle in another guise: a group of companies building AI data centers and selling Bitcoin to finance their operations.

Is this a temporary reaction to an unfavorable economic environment or a permanent structural shift? It depends on one variable: the price of Bitcoin. If it returns to $100,000, mining profits will recover, and the AI transition will slow. If it stagnates at $70,000 or lower, the transition will accelerate, and the mining industry, which has been centered around mining for the past decade, will continue to disappear into something entirely different.

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