Miners welcome a new life

Article Author: Prathik Desai

Article Compiled by: Block unicorn

For over a decade, Bitcoin mining farms have faced criticism in the energy and technology sectors. Their enormous power consumption has triggered congressional hearings, ESG rating downgrades, and ongoing public backlash. Yet today, these farms have signed 15-year lease agreements with companies like Microsoft, Google, and Anthropic. The farms themselves have changed little. In fact, if there is one commonality among these farms over the past decade, it is the crisis itself. So, what exactly has happened?

There is an interesting saying about crises: "The best opportunities often come from the most severe crises." The experience of Bitcoin miners exemplifies this. From July 2016 to April 2024, they have undergone three halvings. Each halving reduces the block reward by half, forcing miners to seek cheaper electricity in increasingly remote corners of the U.S. power grid, including West Texas, rural Georgia, and the plains of North Dakota.

The weak have been eliminated. Some companies have transformed in time. Others have learned their lessons later.

In today's story, I will explain how the surge in artificial intelligence infrastructure investment aligns with the increasing computing power and processing capabilities of miners, helping them gain new vitality.

Now, let’s continue.

Halving - The First Turning Point

The first survival test for Bitcoin miners occurred in April 2024, during the most recent Bitcoin halving event. Each halving serves as a stress test. However, with each halving, the rewards are halved, and the challenges double.

The April 2024 Bitcoin halving reduced the block reward from 6.25 BTC to 3.125 BTC. Within a week after the most recent halving, the price of computing power dropped from $0.12 per terahash to $0.047 per terahash. Computing power refers to the expected earnings miners receive per unit of computing power. By the first quarter of 2026, the price of computing power fell to its lowest point in five years, at $0.023 per terahash per day.

Currently, the average cost to produce one Bitcoin is about $81,000. When including other non-production costs necessary to keep miners operational, the total cost of mining one Bitcoin far exceeds $115,000. The current trading price of Bitcoin is $70,760. Over the past three months, its price has never exceeded $80,000. You can do the math.

The Bitcoin mining industry can only continuously pursue lower mining costs, while it has no control over the price of Bitcoin.

Miners whose primary income comes from the difference between the Bitcoin mined and the Bitcoin sold on the open market suddenly found their financial statements showing losses. Thus, they opted to hold onto the mined Bitcoin instead. Their thinking was to wait for the price of Bitcoin to rise to a level that would allow them to achieve positive returns.

This strategy worked until the price of Bitcoin began to rise. However, market fluctuations are cyclical. Every bull market experiences bear markets and corrections. The cryptocurrency market is no exception.

10/10 - The Second Turning Point

October 10, 2025: A frightening day for the cryptocurrency industry, witnessing the largest cryptocurrency liquidation in history. Since then, cryptocurrency prices have experienced record declines, marking the beginning of a bear market cycle. This led to the complete collapse of the miners' "mine and hold" strategy.

Some companies began to hesitate about changing their strategies. But some companies announced strategic transformations within 24 hours after the liquidation event.

On October 11, Bernstein released a report redefining the role of Bitcoin miners, no longer viewing them as computing power producers but as holders with access to gigawatt-level secure power grids. Analysts referred to these miners as "a key link in the artificial intelligence value chain." They unanimously identified IREN (formerly Iris Energy) as the preferred choice for successfully transitioning from Bitcoin mining to focusing on AI cloud infrastructure.

Digital asset leader and AI infrastructure provider Galaxy Digital announced it had raised $460 million to convert its Helios mining facility in Texas into a high-performance computing (HPC) campus for CoreWeave, with a 15-year lease expected to generate over $1 billion in annual revenue.

Following the 10/10 event, a series of systemic balance sheet liquidations ensued, which had defined the identity of the industry with the "mine and hold" strategy. Miners had spent at least 18 months accumulating Bitcoin as a reserve asset, viewing unsold Bitcoin as a signal of confidence.

Under the pressure of the bear market, the price of Bitcoin fell about 40% within 45 days from its historical high of approximately $126,000, causing this stance to waver. Some publicly listed miners who had never sold Bitcoin before began to sell. Marathon Digital (MARA), the third-largest publicly listed Bitcoin holder in the U.S., broke its record of holding Bitcoin continuously, selling 15,133 Bitcoins within three weeks.

The CEO of this company had always supported and drawn inspiration from the strategic reserve, which is the largest corporate Bitcoin reserve. Less than two years ago, MARA's CEO and Chairman Fred Thiel announced that Bitcoin would become its strategic reserve asset.

Just last month, Fred's attitude took a 180-degree turn, admitting that selling Bitcoin "enhanced financial flexibility and increased strategic options as we expanded our business from pure Bitcoin mining to digital energy and AI/high-performance computing infrastructure."

However, I won't blame him. Tough times require tough decisions. Moreover, MARA is not the only company to abandon Bitcoin as a permanent strategic asset.

While some investors increased their Bitcoin reserves after the liquidation event, others slowed their accumulation of Bitcoin or publicly stated they no longer viewed Bitcoin as a strategic reserve asset.

The CEO of Bitfarms candidly admitted, "We are no longer a Bitcoin company." Ben Gagnon added that Bitfarms would focus on "building the infrastructure for future computing." CleanSpark took a different approach, viewing its holdings of over 13,000 Bitcoins as productive capital and allocating multi-layer covered call options for them.

Even if Bitcoin does not disappear from their balance sheets, they view it as a resource to strategically drive their infrastructure transformation.

A Blessing in Disguise

Transforming Bitcoin mining farms into AI infrastructure is no easy task. The conversion cost per megawatt can reach $8 million to $11 million, which includes new liquid cooling systems, triple power redundancy, high-bandwidth fiber optics, and network upgrades required for GPU training clusters.

However, mining infrastructure, including cooling, power, and computing capacity, is closer than any other industry to meeting the demands of the AI and data center sectors. Bernstein analysts pointed out in their report that existing infrastructure of miners can reduce deployment time by up to 75%.

This view is not held only by analysts. The deals these mining companies have reached in recent months also confirm this.

IREN signed a $9.7 billion contract with Microsoft to provide GPU cloud hosting services at its facility in Childress, Texas, marking the largest single deal to date between miners and hyperscale data centers. Hut 8 reached a $7 billion deal with Google-backed Fluidstack and Anthropic. Cipher Mining signed an $8.5 billion contract with AWS and Fluidstack. By the fourth quarter of 2025, the revenue share of Core Scientific's AI hosting business (i.e., renting space in data centers for IT equipment) is expected to rise from 9% four quarters ago to 39%.

The Surprising Moat

But why would hyperscale data center operators pay mining companies for data center space?

Timing is the key to victory. To survive each halving of electricity prices, miners have had to chase cheaper power. To survive, they have had to take various measures: negotiating long-term power supply agreements, acquiring industrial land in low-cost energy corridors, building dedicated substations, and ensuring direct interconnection with the grid. Modern mining farms are equipped with dedicated high-voltage transformer equipment, redundant power supplies, and thermal management systems designed to operate at full load around the clock.

Perhaps this was not planned in advance; you might say miners just got lucky. But who can strike gold while struggling for survival?

Currently, public miners have about 6.3 gigawatts of operational installed capacity, with another 2.5 gigawatts under construction. In the U.S., most markets have a queue time of 5 to 7 years for data center interconnections. Microsoft's internal forecasts indicate that its data center resource shortages will continue into 2026 and beyond.

This is why hyperscale data center operators overlook the mining companies' lack of expertise in AI infrastructure. Instead, they are paying for substations, land use permits, utility relationships, and grid connections, which often take years to secure elsewhere.

Mining companies can gradually improve their performance by applying existing equipment to AI applications. MARA recently announced a $1.5 billion investment in energy infrastructure, which will bring its total generation capacity to over 2.2 gigawatts. This enables MARA to convert a depreciated facility into AI infrastructure at costs unmatched by other AI infrastructure builders.

CEO Fred Thiel referred to these assets as ready-made infrastructure that would take up to 10 years and $2 billion to $3 billion to build independently. He stated, "Power is a scarce input in the AI field, and with the planned acquisition of Longreach Energy, we will control an efficient, contracted energy platform."

The Closing Window

There is a trap in this story. Every megawatt of energy transferred from Bitcoin mining to AI infrastructure subsidizes the economic interests of those still engaged in Bitcoin mining. This lowers mining difficulty, making it cheaper for Bitcoin miners to mine a block.

Perhaps some will still choose to use part of their equipment for Bitcoin mining, to be used when prices drop. But this is limited to those who can afford the costs of replacing equipment or reserving mining equipment. Not everyone can do this. The reason is that those using mining equipment for AI infrastructure cannot repeatedly switch between mining and AI. Mining is an interruptible process. When electricity prices are high, you can turn off the mining machines. But AI and high-performance computing cannot do that. Once you lease or commit your computing power, you cannot temporarily cancel the agreement to use that equipment for Bitcoin mining.

However, for most miners, this is not a viable option. They have only a short time window to complete the shift, and such good fortune does not occur often.

Everything has progressed so smoothly that it is almost unbelievable. The Bitcoin halving has compressed the economic benefits of mining to the limit. The subsequent 10/10 liquidation event forced miners to face reality: holding Bitcoin during a bear market cycle is not a viable strategy. However, the booming development of AI infrastructure comes at a timely moment, providing miners with both the motivation to transform and the assets needed to execute the transformation.

This situation is unlikely to repeat. Mining companies signing contracts today will enjoy the economic benefits for the next decade, while latecomers will miss out on these benefits.

That’s all for today; see you in the next article.