The bitcoin mining industry is undergoing the most fundamental transformation in its history, and the clearest sign is not hashrate or difficulty adjustments. They are the balances.
CoinShares’ Q1 2026 Mining Report, released this week, reveals that the weighted average cash cost to produce one bitcoin among publicly traded miners rose to approximately $79,995 in Q4 2025.
Bitcoin has traded in the $68,000 to $70,000 range, and a CoinDesk report last week estimated losses of $19,000 per BTC mined.
These figures are not sustainable and the industry knows it. The response has been a widespread shift toward artificial intelligence infrastructure that is reshaping what these companies really are.
According to the CoinShares report, more than $70 billion in cumulative AI and high-performance computing contracts have been announced across the public mining sector. CoreWeave’s expanded deal with Core Scientific alone is worth $10.2 billion over 12 years. TeraWulf has $12.8 billion in contracted HPC revenue. Hut 8 signed a 15-year, $7 billion lease for artificial intelligence infrastructure at its River Bend campus. Cipher Digital has a multimillion-dollar deal with Google-backed Fluidstack.
Publicly traded miners could earn up to 70% of their revenue from AI by the end of 2026, up from about 30% today. Core Scientific’s AI placement revenue already represents 39% of its total. TeraWulf is at 27%. IREN is at 9% and rising rapidly with up to 200 megawatts of liquid-cooled GPU capacity under construction.
That means these mining companies are increasingly becoming data center operators that still mine bitcoins on the side.
Economics explains why. According to CoinShares, the cost differential between bitcoin mining infrastructure, at approximately $700,000 to $1 million per megawatt, and artificial intelligence infrastructure, at $8 to $15 million per megawatt, is wide, but AI offers structurally higher and more stable returns.
The price of hash, the metric that determines miners’ income per unit of computing power, hit an all-time low after halving from about $28 to $30 per petahash per day in early March.
At those levels, miners running mid-generation hardware need access to electricity below $0.05 per kilowatt-hour to remain cash profitable. Meanwhile, AI infrastructure contracts promise margins of over 85% with revenue visibility over several years.
How finances work
The transition is being funded in two ways and both are visible in the data, the report explains.
First, the debt. The sector’s aggregate leverage has fundamentally changed. IREN now has $3.7 billion in convertible notes in five series. TeraWulf has total debt of $5.7 billion, divided between convertible notes and senior secured notes at its IT subsidiary.
Cipher Digital issued $1.7 billion in senior secured notes in November, causing its quarterly interest expenses to rise from $3.2 million during the first nine months to $33.4 million in the fourth quarter alone. These are not mining-scale debt loads. These are infrastructure-scale bets that AI revenues will materialize quickly enough to meet obligations.
Secondly, 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 substantially all remaining holdings in the first quarter of 2026. Bitdeer reduced its treasury 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 authorize sales of its entire balance sheet reserve, partly driven by pressure on its $350 million bitcoin-backed credit facility, where the loan-to-value ratio rose to 87% as prices fell to $68,000.
The miners who sell bitcoins to fund AI development are the same companies whose mining operations protect the bitcoin network. That creates a 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 that, the network’s security budget is reduced.
The hashrate data already reflects this. The network peaked at about 1,160 exahashes per second in early October 2025 and has since slowed to about 920 EH/s, with three consecutive negative difficulty adjustments, the first such streak since July 2022.
The valuation market has already priced in the fork. Miners with secured HPC contracts now trade at 12.3 times next twelve months’ sales. Exclusive miners trade at 5.9x. The market is paying more than double for AI exposure, reinforcing the incentive to keep pivoting.
Meanwhile, the geographic landscape is changing along with the economic one. The United States, China and Russia now control approximately 68% of the global 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, boosted by HIVE’s 300-megawatt operation in Paraguay and Bitdeer’s 40-megawatt facility in Ethiopia.
Hashrate forecasts and estimates
CoinShares forecasts 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 previously predicted.
But that forecast depends on bitcoin recovering 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 hash rate to continue to decline as more miners exit.
A sustained move below $70,000 could trigger further capitulation which, paradoxically, benefits survivors through reduced hardship.
Next-generation hardware offers a potential lifesaver. Bitmain’s S23 series and Bitdeer’s proprietary SEALMINER A3, both operating below 10 joules per terahash, are expected to be at scale during the first half of 2026. These machines would roughly halve the energy cost per bitcoin compared to current mid-generation fleets. But implementing them requires capital that many miners are directing toward AI.
The bitcoin mining industry entered this cycle as a group of companies securing the network and accumulating bitcoins. It is emerging as a group of companies building AI data centers and selling bitcoins to finance them.
Whether it is a temporary response to an unfavorable economy or a permanent structural change depends on one variable: the price of bitcoin. If it goes back to $100,000, mining margins recover and the AI spin slows down. If it remains at $70,000 or less, the transition accelerates and the mining sector as it existed for the last decade continues to disappear and become something completely different.
