The Shift in Bitcoin Mining: AI Takes the Lead as Costs Surge

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Key Takeaways

The Bitcoin mining sector has reached a critical point, facing unprecedented costs and dwindling profitability.
Artificial intelligence (AI) is increasingly competing for mining infrastructure, driving the sector’s transformation.
Two distinct models are emerging within the industry: large-scale AI-focused miners and low-cost mobile miners utilizing stranded energy sources.
The competitive landscape for miners is drastically changing, pushing them to adapt or relocate to less conventional energy sources.

Pour yourself a coffee and explore how the Bitcoin mining industry is transforming. With soaring expenses, declining fees, and the emergence of AI, miners must reassess their strategies as stable operations evolve into a competitive arena for advanced computing power.

AI Dominates Bitcoin Mining as Costs Soar

According to the CoinShares Bitcoin Mining Report Q4 2025, the Bitcoin mining industry is currently experiencing a crisis. Production costs have reached historic highs, the hash price has plummeted, and AI is now outbidding miners for their infrastructure, leading to the most significant changes the sector has ever encountered.

As the industry approached Q2 2025, it faced a harsh new reality. Despite shrinking margins, the Bitcoin network successfully surpassed the milestone of 1 Zetta hash/s for the first time in August. However, public miners accounted for only about 80 EH/s of the growth this year, indicating that the majority of growth is coming from private operators, sovereign miners, and well-funded energy companies that can access power at significantly lower costs. As a result, traditional miners are being overshadowed by an increase in hashrate they no longer control.

AI Takes Over—Paying Up to 20 Times More Per Megawatt

A substantial shift is unfolding at the infrastructure level. Large-scale mining facilities, which range from 100MW to 1GW, have similar power, cooling, and rack density needs as modern AI data centers. This parallel has made mining facilities attractive targets for major tech companies.

Partnerships like those between Google and TeraWulf, Google and Cipher, as well as various deals with Fluidstack, indicate that the tech giants are willing to pay a premium for the miner-installed capacity. The economics are compelling: Bitcoin mining generates approximately $1 million per megawatt, while AI compute can yield as much as $10 to $20 million for the same amount of energy. No miner can overlook this significant disparity.

Industry Divergence: AI Megacampuses versus Mobile Miners

The sector is now dividing into two distinct models:

AI Megacampuses - These facilities are upgrading their electrical frameworks and uptime standards to meet the requirements of enterprise-level contracts. They are securing long-term agreements and shifting from fluctuating block rewards to stable revenue based on capacity.
Mobile Miners - Miners who can’t compete with AI are moving to stranded energy sources, such as flare gas, remote hydro, and surplus renewable energy. Portable mining rigs are being implemented in areas where energy is inexpensive, harking back to the decentralized roots of mining.

This transition indicates a lasting transformation of the industry rather than a temporary phase. According to CoinShares analysts, the hash price is projected to stay between $37 and $55 per PH/s/day until 2028, unless Bitcoin experiences a substantial surge in value.

A Permanent Transformation: AI Outbids Traditional Mining

For the first time in Bitcoin's history, miners are being priced out of their own infrastructure. The superior economic advantages of AI, combined with lucrative deals from tech giants and the rising costs associated with traditional mining, are steering the industry towards a permanent evolution.

While the Bitcoin network remains robust and the hashrate continues to escalate, the mining business model is rapidly changing. Miners are faced with a critical choice: pivot towards AI or relocate operations to utilize stranded energy sources.

Chart of the Day

Analysis of the Cost to Mine Bitcoin. Source: CoinShares

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