Bitcoin Mine Shifts: AI Takes Over 🚀🤯

Tech & Science

One afternoon in June 2024, I observed construction at a sprawling industrial facility located a few miles outside Corsicana, Texas. Standing behind a metal gate, I watched a bright yellow excavator working to move dirt and flatbed trucks continuously transporting materials. A hangar-like structure, spanning hundreds of meters along the opposite perimeter and boasting a gleaming white roof, was under development. The company, Riot Platforms, was in the process of building what would become the world’s largest bitcoin mine. A year and a half later, approximately two-thirds of the facility is being repurposed to accommodate AI and high-performance computing (HPC) tasks. What began as a temple to bitcoin is now poised to transform into an AI megafactory. This shift in focus is mirroring a similar trend across the United States, where numerous bitcoin mining facilities – including Bitfarms, Core Scientific, Riot, IREN, TeraWulf, CleanSpark, Bit Digital, MARA Holdings, and Cipher Mining – have announced plans to either partially or completely transition to AI. This change is driven by intense demand from AI companies seeking data centers capable of handling the energy-intensive calculations needed to train their models. Ironically, as the AI arms race escalates, large-scale bitcoin mining firms—which played a crucial role in the AI boom by investing billions of dollars in data center infrastructure—are now being compelled to reinvent themselves. “Bitcoin mining created the blueprint for the AI compute boom and the modern data center,” noted a source.

Meltem Demirors, general partner at the VC firm Crucible Capital, which invests in companies within the crypto, compute, and energy sectors, notes that companies are increasingly finding lower costs of capital by aligning themselves with the artificial intelligence narrative. These firms are repurposing existing infrastructure – removing [mining machines] and leveraging tenants who provide graphics processing units (GPUs). The competition to secure the right to process a batch of bitcoin transactions and claim the associated reward relies on successfully solving a complex computational puzzle. A mining operation’s profitability is largely determined by the prevailing price of bitcoin, the computational power applied to the puzzle, and the expense of powering specialized mining hardware required for competitiveness. In 2024, the reward for solving this puzzle decreased by half – a recurring event roughly every four years – to 3.125 bitcoin. Against this backdrop, the recent decline in the price of bitcoin to approximately $85,000, a 30 percent drop from its peak in 2025, has created a challenging situation threatening the profitability of most mining operations. “The economics are terrible today,” says Charles Chong, VP of strategy at the crypto advisory firm BlockSpaceForce and former director of strategy at the bitcoin mining company Foundry. According to research from the crypto investment firm CoinShares, as of mid-November, only a small number of the largest publicly traded bitcoin mining companies were projected to remain profitable given the current bitcoin price. The AI market, however, offers the potential for significantly higher returns.

Margins and predictable revenues, secured through multiyear contracts with major tech firms, have fueled a recent shift within the publicly traded bitcoin mining sector. CoinShares’ research indicates that in the last few months, these companies have announced contracts totaling over $43 billion for artificial intelligence and high-performance computing (HPC). “Bitcoin mining is still profitable,” asserts Ben Gagnon, CEO at bitcoin mining company Bitfarms, which plans to transition entirely to AI and HPC by 2027. “The predictable value creation of HPC—specifically, the significant amount of value generated per unit of energy over years—makes continued investment in traditional bitcoin mining unsustainable.” The public market appears to be recognizing this shift, rewarding mining companies that are embracing AI. “These are opportunistic companies,” explains Chong. “Their initial foray into bitcoin was driven by risk-taking; now, they’re seeing a similar opportunity with AI.”

Despite this trend, some companies remain committed to pure-play bitcoin mining, including American Bitcoin, a firm launched by Eric Trump. Initially spun out of Hut 8—a former bitcoin mining company now operating in the AI and HPC space and which maintains a majority ownership stake—American Bitcoin currently lacks its own mining facilities, focusing instead on acquiring specialized mining hardware. According to its president, Matt, the company is presently able to mine a single unit of bitcoin at an average all-in cost of approximately $50,000, thanks to favorable power rates and comparatively low overheads.

“Efficiency is the coin of the realm,” according to Fred Thiel, chief executive at MARA—then a pure-play mining operation—who stated this in an interview with WIRED in June. Thiel expressed skepticism about the ability of bitcoin miners to transition into AI hosting as smoothly as desired. “A bitcoin mining data center is the simplest type there is,” he noted. “It’s very hard for bitcoin miners to pivot to be hosts for large-scale enterprises.” Specifically, AI clients demand near-perfect uptime to train their models, a requirement that many bitcoin miners have historically addressed by promising grid operators to curtail power usage during peak demand periods – a system involving supplying electricity with 99.99999 percent uptime. Thiel emphasized, “You have to have power 99.99999 percent of the time.” Consequently, miners have been forced to invest in generators and self-power-generation systems to compensate for these discrepancies, a process he described as “very expensive.” However, in recent months, several former pure-play mining companies have secured multi-billion dollar hosting deals with major tech firms such as Amazon, Microsoft, and Google, suggesting these companies do not share Thiel’s concerns. For instance, American Bitcoin has begun deploying hardware for AI workloads at one of its facilities, leading some experts to anticipate that the American Bitcoin industry may face pressure to follow its peers into the field of artificial intelligence.

“AI deal with a hyperscaler, you’re going to fucking do it,” says Demirors. “Let’s not kid ourselves.” Prusak, however, holds a different view: “You want to maximize shareholder returns, but you want to do so in a way that’s germane to your core business. American Bitcoin was not built as a generic data infrastructure company.” Analysts caution that the shift among industrial-scale miners into AI may ultimately prove detrimental to the long-term stability of the Bitcoin network. A significant decrease in Bitcoin mining activity could increase the possibility of a 51 percent attack, where an individual could hijack Bitcoin transactions by controlling the majority of computing power directed at the network. Currently, such an attack remains prohibitively expensive. Nevertheless, as the reward for Bitcoin mining continues to decrease every four years, the concern is that mining will no longer be economically viable. “It’s definitely a threat—and a serious one,” claims Chong, the BlockSpaceForce executive. “But how soon is an open question.” More likely, observers predict that mining will instead migrate to regions with cheaper and more abundant energy sources. MARA, for instance, announced plans to build a facility in Paraguay. “The US market is more saturated from an energy demand perspective; you’re constantly competing with the AI industry for energy here,” says Thiel.