Bitcoin Miners Turn to AI as Profits Collapse

Bitcoin (BTC) miners are under fresh pressure after one of the toughest quarters since the April 2024 halving. CoinShares says the weighted average cash cost to produce one Bitcoin among public miners rose to about $79,995 in Q4 2025, while hash price fell further to roughly $29 per PH/s/day in Q1 2026. That combination is forcing a sharper split between miners still focused on Bitcoin and those turning into AI infrastructure businesses.

Mining margins are getting crushed

In a recent report, published on March 25, CoinShares described Q4 2025 as the most difficult quarter for miners since the halving, with Bitcoin’s pullback from about $124,500 in early October to about $86,000 by late December squeezing an industry already dealing with near-record hashrate.

Hash price dropped to near breakeven in Q4 and then slid further in Q1, intensifying pressure on operators running older machines.

The network itself remains huge, but the economics have worsened. Bitcoin surpassed 1 zettahash in late August 2025 and peaked near 1,160 EH/s in early October before falling back. 

CoinShares says any miner running below an S19 XP at electricity costs of 6 cents per kWh or more is now losing money, a group it estimates represents roughly 15% to 20% of the global fleet.

That explains why the report flagged three straight negative difficulty adjustments as a sign of capitulation. Some miners are already selling treasury holdings and cutting exposure just to stay afloat.

Why AI is changing the mining business

The bigger shift is where miners think the better economics are. CoinShares says listed miners could derive as much as 70% of their revenue from AI by the end of this year, up from roughly 30% now, with more than $70 billion in cumulative AI and high-performance computing (HPC) contracts announced across the sector.

That has changed the sector’s risk profile. Companies like TeraWulf, Core scientific, Cipher Digital, and Hut 8 are increasingly being valued as data-center operators that still happen to mine Bitcoin. At the same time, leverage is rising fast as firms borrow heavily to build AI capacity.

CoinShares still expects hashrate to reach 1.8 zetahash by the end of 2026, but the message from this report suggests that mining is no longer a simple Bitcoin story. It is turning into a fight over energy, balance sheets, and whether AI now offers a better business than mining itself.