This article, written by Tiger Research, discusses how the drastic drop in Bitcoin prices has forced miners to change their business models.
Key Points
Unstable revenues and rising Bitcoin mining costs have made the core business of cryptocurrency mining enterprises unstable.
As a result, cryptocurrency mining enterprises are transforming, renting out data center space from existing mining sites to large tech companies.
This move has reduced intense competition, making the industry more resilient.
1. Business Risks Facing Cryptocurrency Mining Enterprises
We previously analyzed the financial risks posed by the decline in Bitcoin prices to Digital Asset Treasury (DAT) reserve companies. However, it is not only DAT companies that are under pressure. Bitcoin mining companies directly operating mining businesses also face significant risks.
The vulnerability of mining companies stems from their structurally simple business models. Revenues depend almost entirely on Bitcoin prices, which are inherently unpredictable. In contrast, costs tend to rise over time.
Revenue is unpredictable: company revenues depend entirely on Bitcoin market prices.
Structural cost increases: mining difficulty continues to rise, electricity prices are increasing, and hardware needs to be replaced regularly.
This structure is especially problematic during periods of declining Bitcoin prices. Revenues drop immediately while costs continue to rise. Mining companies find themselves in a double bind.
Regulatory risks add another layer of uncertainty. A proposal has been put forward in New York State to raise the consumption tax on mining companies. Currently, most large cryptocurrency mining companies are located in regions with relatively lenient regulations, such as Texas, so the short-term impact is limited. Nevertheless, the risks posed by broader regulatory pressures should not be underestimated.
Against this backdrop, mining companies face a fundamental question: can this business model maintain viability in the long term?
2. Structural Vulnerabilities of Cryptocurrency Mining Companies
So far, the average cost of mining one Bitcoin is approximately $74,600, an increase of nearly 30% from a year ago. When considering factors such as depreciation and equity incentives, the total production cost for each Bitcoin will rise to about $130,000.
The current trading price of Bitcoin is approximately $90,000, which means that mining companies incur an accounting loss of about $46,000 for each Bitcoin mined. This gap highlights the growing disconnection between operational costs and market prices.
Over time, the situation has become more fragile. Compared to 2022, mining difficulty has significantly increased in 2025, while energy regulations in multiple regions are becoming increasingly stringent. These factors have reduced the predictability of costs and decreased the structural stability of mining operations.
3. Transition to Artificial Intelligence Data Center Leasing
As competition in the field of artificial intelligence becomes increasingly fierce, the demand for data centers from large technology companies has surged. However, building new data centers takes years. Waiting is unacceptable in AI competitions measured in months or quarters.
Mining companies have discovered the opportunities presented by this market gap. The facilities they currently operate are equipped with high-performance computing hardware, large-scale power supply, and advanced cooling systems. Although these facilities cannot be completely transformed overnight, their specifications align closely with the demands of large technology companies. This enables them to relatively quickly transition into artificial intelligence data centers.
High-performance GPUs: Cryptocurrency mining companies operate large GPU clusters that can be repurposed for AI computing. NVIDIA GPUs are a common example. By adjusting their facilities, these assets can support new revenue streams beyond mining.
Power Infrastructure: Mining companies have gained access to hundreds of megawatts of grid capacity. In strictly regulated electricity markets, such access is scarce and difficult to replicate, even with funding.
Cooling Systems: The experience accumulated from operating ASIC miners can be well applied to managing high-heat AI servers such as H100 and H200. In fact, many mining sites can be transformed into AI data centers within six to twelve months.
Core Scientific is a typical example. The company faced bankruptcy risks in 2022 but successfully transformed to enter the field of artificial intelligence data center operations. Currently, it operates data center capacity of approximately 200 megawatts and plans to gradually expand to 500 megawatts. This transformation from a struggling mining company to a data center leasing enterprise illustrates how the utilization of alternative infrastructure can help stabilize business development.
Other mining companies are also following similar models. IREN and TeraWulf are expanding into areas beyond their core mining operations. Although they have not fully transformed into data center leasing companies, they are developing supplementary business models outside of Bitcoin mining.
These initiatives reflect a broader trend. As mining profitability declines, cryptocurrency mining companies are seeking business models that are more adaptive to the era of artificial intelligence. This shift is less about growth ambitions and more about necessity.
4. Diversification Strategies of Cryptocurrency Mining Companies
The shift of cryptocurrency mining companies from unprofitable mining operations to artificial intelligence data center businesses is not a temporary trend, but rather reflects a rational survival strategy aimed at reallocating capital to more efficient uses.
This transformation should not be seen as a negative development. On the contrary, it helps mining companies establish more stable cash flows. With more stable revenues, companies can continue to hold Bitcoin without being forced to sell at low prices.
Another option is far from it. Companies with persistently negative cash flow face bankruptcy risks and are often forced to sell Bitcoin at unfavorable prices. In contrast, data center revenues allow mining companies to flexibly hold or sell Bitcoin, enabling strategic trading. This is more beneficial for both the companies and the overall market.
Not all companies focus solely on pure data center leasing. Some companies, such as Bitmine and Cathedra Bitcoin, are expanding their businesses into DAT-style business models beyond mining.
In summary, these changes show that the cryptocurrency mining industry is maturing. Weaker competitors are exiting the market or transforming, alleviating mining pressure. At the same time, leading companies are evolving from simple mining operations into diversified DAT businesses.
In fact, weaker links are being eliminated, and the overall market structure is becoming more resilient.
(The above content is excerpted and reproduced with the authorization of partner PANews, original link | Source: Tiger Research)
"Why are Bitcoin miners collectively turning to AI? The reasons behind it are astonishing" was first published on (Block Guest).
