BTC Mining Profitability Erodes as Miners Pivot to AI

| coingeek.com
Bitcoin mining profitability is weakening despite a partial BTC price recovery. Earlier pressure came from production costs near $85,000 while BTC traded around $62,000, making mining difficult for operators without efficient ASICs and low-cost power. A forecast difficulty decline offered temporary relief, but the latest CoinShares analysis shows listed miners fell below cash breakeven in Q2 2026 as hash price reached record lows. Network difficulty was expected to rise by more than 5% to above 134 trillion on 19 September. Miners are accelerating their shift to artificial intelligence and high-performance computing (AI/HPC). CoinShares estimates annual profit of about $1.5 million per megawatt for AI/HPC, versus roughly $500,000 for BTC mining. At least 35 EH/s, or about 4.7% of Bitcoin’s network hashrate, could move to AI/HPC in Q3. AI/HPC revenue is expected to more than double in the second half of 2026. Miners with AI or HPC contracts trade at an average forward enterprise-value multiple of 12.9, compared with 3.7 for those without such contracts. Hut 8, IREN, Cipher Digital, Keel Infrastructure and Cango have highlighted GPU, AI or data-centre expansion, while Bitdeer is developing water-cooled ASICs and Alberta infrastructure. BitFuFu remains focused on mining but reported losses linked to BTC price pressure. Cango increased hashrate to 23.3 EH/s but produced only 236.5 BTC in May. Falling ASIC prices could help committed miners, but transaction fees remained below 1% of block rewards in Q2. Energy and regulatory risks are also increasing. Ethiopia cut miners’ electricity allocation to 23% of contracted capacity after drought reduced hydropower inflows. Authorities in Mexico and Malaysia seized equipment tied to illegal mining, while Oman tightened controls and Russia considered restricting power supplies. China and Microsoft separately warned that malicious AI tools or GPU cryptojacking could divert computing resources to Bitcoin mining. With the 2028 halving approaching, BTC mining profitability will remain vulnerable unless Bitcoin’s price or fee revenue rises substantially.
Bearish
The direct impact on BTC is bearish. Persistently weak mining economics, rising difficulty, record-low hash price and production costs above market prices can force inefficient miners to shut down or sell BTC reserves. That creates potential short-term selling pressure and increases balance-sheet risk across the mining sector. The shift of at least 35 EH/s toward AI/HPC may eventually reduce Bitcoin’s hashrate and could lead to lower difficulty at a future adjustment. However, the immediate effect is more negative because it signals that miners see stronger returns outside BTC mining. Low transaction-fee revenue provides little support, while energy restrictions, illegal-mining seizures and the approaching 2028 halving add further uncertainty. A sustained BTC price recovery could improve miner cash flow and reduce selling pressure, but the current evidence favours continued volatility and a cautious or bearish trading view.