Bitcoin Miners Shift to AI as Margins Compress, Cash Costs Jump

CoinShares warns that Bitcoin miners are entering a tougher cycle as production costs rise, revenues fall, and BTC price weakness compresses margins. Average cash costs to mine 1 Bitcoin hit about $80,000 in Q4 2025. Mining income deteriorated alongside “hashprice,” which fell from roughly $36–$38 to $28–$30 per PH/s/day, driven by weaker revenue per unit of computing power. CoinShares links part of the compression to Bitcoin dropping from around $125,000 (Oct 2025) to about $86,000 (Dec 2025). To preserve liquidity, Bitcoin miners have begun liquidating reserves and cutting operations. Public miners sold over 15,000 BTC from peak holdings; examples cited include Core Scientific, Riot Platforms, and Bitdeer, while MARA reportedly sold 15,133 BTC. The network also saw three consecutive downward difficulty adjustments in late 2025, suggesting less efficient miners exited. Hashrate fell from ~1,160 EH/s (Oct 2025) to ~850 EH/s (Feb 2026) before rebounding to ~1,020 EH/s. Near-term profitability hinges on BTC price recovery. CoinShares notes a potential base case recovery toward $100,000 could lift hashprice to around $37. But if Bitcoin stays below $80,000 for longer, further shutdowns may follow, eventually stabilizing capacity. Strategically, Bitcoin miners are pivoting into AI and high-performance computing. CoinShares estimates ~30% of listed miners’ revenue already comes from these activities, potentially rising to ~70% by end-2026, supported by $70B+ announced AI/data-computing contracts. Financing risk is also rising: several firms issued major debt (e.g., IREN convertible notes raising $3.7B; TeraWulf debt $5.7B; Cipher $1.7B). CoinShares also highlights shifting hashrate geography and low-cost energy growth in places like Paraguay, Oman, and Ethiopia.