The bitcoin mining industry is undergoing the most fundamental transformation in its history, and the clearest sign isn’t hashrate or difficulty adjustments. These are the balance sheets.
CoinShares’ Q1 2026 mining report, released this week, reveals that the weighted average cash cost to produce one bitcoin among publicly traded miners reached approximately $79,995 in Q4 2025.
Bitcoin is trading in the $68,000 to $70,000 range, with a CoinDesk report last week estimating losses at $19,000 per BTC mined.
These numbers are not sustainable, and the industry knows it. The answer has been a global shift toward artificial intelligence infrastructure that reshapes what these businesses actually are.
According to the CoinShares report, more than $70 billion in cumulative AI and high-performance computing contracts have been announced in the public mining sector. CoreWeave’s expanded deal with Core Scientific alone is worth $10.2 billion over 12 years. TeraWulf has contracted HPC revenue of $12.8 billion. Hut 8 has signed a 15-year, $7 billion lease for AI infrastructure at its River Bend campus. Cipher Digital has a multibillion-dollar deal with Google-backed Fluidstack.
Listed mining companies could derive up to 70% of their revenue from AI by the end of 2026, up from around 30% today. Core Scientific’s AI colocation revenue already represents 39% of its total. TeraWulf is at 27%. IREN is at 9% and scaling quickly with up to 200 megawatts of liquid-cooled GPU capacity under construction.
This means that these mining companies are increasingly becoming data center operators that still mine Bitcoin in parallel.
Economics explains why. According to CoinShares, the cost difference between Bitcoin mining infrastructure, around $700,000 to $1 million per megawatt, and AI infrastructure, between $8 million and $15 million per megawatt, is significant, but AI offers structurally higher and more stable returns.
Hash price, the metric that determines miners’ revenue per unit of computing power, hit an all-time post-halving low of around $28 to $30 per petahash per day in early March.
At these levels, miners using mid-generation hardware must have access to electricity below $0.05 per kilowatt hour to remain profitable. Meanwhile, AI infrastructure contracts promise margins above 85% with multi-year revenue visibility.
How Finance Works
The transition is being financed in two ways, and both are visible in the data, the report explains.
First, the debt. The overall sector debt has fundamentally changed. IREN now holds $3.7 billion in convertible notes across five series. TeraWulf has total debt of $5.7 billion, split between convertible notes and senior secured notes in its IT subsidiary.
Cipher Digital issued $1.7 billion of senior secured notes in November, pushing its quarterly interest expense from $3.2 million for the first nine months to $33.4 million in the fourth quarter alone. This is not debt on a mining scale. These are infrastructure-wide bets that AI revenues will materialize quickly enough to meet obligations.
Second, Bitcoin sales. Publicly traded miners have collectively reduced their BTC treasuries by over 15,000 BTC from peak levels. Core Scientific sold approximately 1,900 BTC worth $175 million in January and plans to liquidate almost all remaining holdings in the first quarter of 2026. Bitdeer reduced its cash position to zero in February. Riot Platforms sold 1,818 BTC worth $162 million in December.
Even Marathon, the largest public holder with 53,822 BTC, quietly expanded its policy in its March 10-K filing to allow sales of its entire balance sheet reserve, partly under pressure on its $350 million bitcoin-backed credit facility, where the loan-to-value ratio soared to 87% as prices fell to $68,000.
Miners who sell Bitcoin to fund AI development are the same companies whose mining operations secure the Bitcoin network. This creates tension at the heart of the transition. When mining is unprofitable and AI is lucrative, the rational economic decision is to reallocate capital away from mining. But if enough miners do this, the network security budget decreases.
The hashrate data already reflects this. The network peaked at around 1,160 exahashes per second in early October 2025 and has since declined to around 920 EH/s, with three consecutive negative difficulty adjustments, the first such streak since July 2022.
The valuation market has already taken into account the bifurcation. Miners with secure HPC contracts are now trading at 12.3 times their next twelve month sales. Pure-play miners trade at 5.9 times. The market is paying more than double for exposure to AI, increasing the incentive to move further.
In the meantime, the geographical situation is evolving alongside that of the economy. The United States, China and Russia now control around 68% of the world’s hashrate. The United States gained about 2 percentage points of market share in the fourth quarter alone.
But emerging markets are entering the picture. Paraguay and Ethiopia have joined the world’s top 10 mining countries, thanks to HIVE’s 300 megawatt operation in Paraguay and Bitdeer’s 40 megawatt installation in Ethiopia.
Hashrate Forecasts and Estimates
CoinShares predicts that the network’s hashrate will reach 1.8 zetahashes by the end of 2026 and 2 zetahashes by the end of March 2027, a month later than expected.
But this prediction depends on bitcoin returning to $100,000 by the end of the year. If prices remain below $80,000, CoinShares expects the hash price to continue to fall and the hashrate to decline further as more miners leave.
A sustained move below $70,000 could trigger a larger capitulation that, paradoxically, would benefit survivors through lower hardship.
Next-generation hardware offers a potential lifeline. Bitmain’s S23 series and Bitdeer’s proprietary SEALMINER A3, both operating below 10 joules per terahash, are expected to be deployed at scale through the first half of 2026. These machines would roughly halve the energy cost per bitcoin compared to current mid-generation fleets. But their deployment requires capital, which many miners are directing towards AI.
The Bitcoin mining industry entered this cycle as a group of companies that secured the network and accumulated Bitcoin. This is a group of companies that build AI data centers and sell bitcoin to fund them.
Whether this is a temporary response to an adverse economic situation or a permanent structural change depends on one variable: the price of Bitcoin. If it returns to $100,000, mining margins recover and the AI pivot slows down. If it stays at $70,000 or less, the transition accelerates and the mining sector as it existed over the last decade continues to disappear and become something else entirely.
