Bitcoin miners have just endured their “most difficult quarter” since the April 2024 halving event. According to a Wednesday report from CoinShares, conditions may worsen as computing revenues drop to their lowest levels in five years. In response, several leading miners are pivoting toward artificial intelligence and high-performance computing, a transition expected to accelerate throughout the year.
James Butterfill, CoinShares’ head of research, pointed out that bitcoin’s price saw a sharp correction in Q4, falling nearly 31% from its peak to about $86,000 in December. At the same time, the average cost of producing a single bitcoin for publicly traded miners—factoring in energy, infrastructure, and debt costs—climbed to $79,995 during the quarter.
At the same time, hash prices—a key indicator of revenue earned per unit of computational power—dropped to between $36 and $38 per petahash per second per day (/PH/s/day). For many miners operating mid- to older-generation equipment, this range is hovering at or near break-even. Butterfill estimates that roughly 15% to 20% of the global mining fleet is currently operating at a loss, depending on hardware efficiency, electricity costs, and a prevailing hash price closer to $30/PH/s/day.
At hash price levels of $30 to $35/PH/s/day, miners using mid-tier hardware must secure electricity at below 5 cents per kilowatt-hour (kWh) just to stay cash-flow positive. In contrast, operators running the latest-generation machines are still maintaining solid profit margins under standard energy rates.
According to Butterfill, these pressures have triggered a wave of capitulation across the mining sector, with many firms offloading their bitcoin reserves. Publicly listed miners have collectively reduced their holdings by more than 15,000 bitcoin from peak levels. CoinShares warns that unless bitcoin’s price sees a significant rebound, further capitulation among higher-cost operators is likely in the first half of the year.
“Current mining conditions don’t support a widespread upgrade cycle for hardware,” Butterfill explained. He noted that hash prices would likely need to drop further to push older, less efficient machines and operators out of the market. That shakeout could reduce overall hashrate and mining difficulty on the Bitcoin network, potentially creating opportunities for new entrants or encouraging existing players to modernize their equipment.
According to CoinShares, a recovery in hash price to around $40/PH/s/day would likely require Bitcoin to climb toward $100,000 by year-end—outpacing the growth in network hashrate.
AI Shift Accelerates
At the same time, the gap between traditional bitcoin miners and those pivoting toward AI-focused infrastructure continues to widen. CoinShares highlighted that more than $70 billion in cumulative AI and high-performance computing (HPC) deals have already been announced within the mining sector.
Butterfill pointed out that companies such as TeraWulf, Core Scientific, Cipher Digital, and Hut 8 are increasingly evolving into data center operators that also mine bitcoin. Based on recent announcements, he estimates that publicly listed miners could generate up to 70% of their revenue from AI by the end of the year—up from roughly 30% today.
While many of these initiatives involve building new data centers, some existing mining operations may be scaled back or shut down entirely. As AI capacity expands, Butterfill expects bitcoin mining to account for a significantly smaller share of revenue for these firms throughout 2026.
However, CoinShares noted that the transition isn’t uniform across the industry. Companies like Iren and Bitfarms are repositioning themselves as HPC providers, using bitcoin mining as a stepping stone toward AI infrastructure. Others, including CleanSpark, remain focused on mining in the near term, leveraging newly developed capacity while gradually exploring AI opportunities.
Butterfill also raised questions about how sustainable this shift will be. While current market conditions strongly favor AI, mining profitability remains closely tied to bitcoin’s price. If mining economics improve significantly, some operators may rethink how they allocate capital between mining and AI—suggesting the current pivot could be driven more by relative returns than a permanent strategic shift.
Source: IBD Edited By Bernie
