Bitcoin miners ditch crypto roots as AI drives 70% of revenue

The companies that built billion-dollar businesses mining Bitcoin are pivoting to artificial intelligence, with the shift set to transform how the industry makes money, according to a report by Bloomberg.

Publicly listed crypto miners are on track to generate the majority of their revenue from AI by the end of this year, marking a move away from the cryptocurrency that once defined their business models.

The transition is being driven by weakening economics in Bitcoin mining. Revenues from validating blockchain transactions have been squeezed by falling token prices and rising energy costs, accelerating a shift that began around three years ago toward building infrastructure for AI workloads.

Data from CoinShares shows AI could account for about 70% of combined revenue at listed miners by December, up sharply from around 30% currently.

Margins tell the story

Bitcoin mining gross margins have dropped to around 60% from above 90% during the 2021 bull run, while AI cloud operations generate margins in the mid-80% range, according to Bloomberg Intelligence.

“This massive decline in Bitcoin’s price, coupled that with the fact that energy price is going up, I think this is going to compel them to make that transition even faster,” Vasu Kasibhotla, senior industry analyst at Bloomberg Intelligence, told Bloomberg.

Electricity alone now consumes roughly 40% of mining revenue, pushing total costs into the low-to-mid 90% range. By contrast, energy costs for AI cloud operators leasing high-powered chips are in the low single digits.

The industry is also facing structural pressure. The “hash price”, a key metric for mining profitability, has fallen to record lows in recent weeks, according to data from Luxor Technology. Mining difficulty has also declined, signalling that some operators are switching off machines as profitability drops.

Adding to the pressure, Bitcoin’s protocol cuts mining rewards in half roughly every four years, a mechanism known as halving, with the latest event in 2024 and the next due in 2028.

Miners remake themselves

Facing shrinking returns, several major players are reinventing their businesses.

Companies including Cipher Digital and Hut 8 are pivoting toward AI data centres, while others are shedding crypto assets to fund the transition. MARA Holdings has sold about $1 billion worth of Bitcoin in recent weeks to focus on AI infrastructure, Bloomberg reported.

The pivot is already paying off in the market. Shares of miners that moved early into AI infrastructure have climbed to record highs, with companies such as TeraWulf, IREN Ltd., Cipher and Hut 8 securing multi-year contracts with major technology firms including Google, Microsoft and Anthropic.

“The long-term economics of HPC and AI data centres should trump Bitcoin mining. Just from a business operations standpoint, you get more visibility, better margin and stronger cash flows out of the data centre business,” Brian Dobson, managing director at Clear Street, told Bloomberg.

End of an era

Despite the exodus, the Bitcoin network itself is expected to remain stable. Its self-regulating design adjusts rewards to ensure enough miners stay on the network to validate transactions.

Still, for the companies that once defined the crypto boom, the shift signals a deeper transformation.

“This transition may prove to be the end of an era for some large US miners, not necessarily in terms of survival, but in how they operate, as they adapt away from models built for a different capital and energy market environment,” Matthew Kimmell, investment strategist at CoinShares, told Bloomberg. “Margins are just getting really thin, hash price kicking bottoms. It’s brutal out there.”