Bitcoin miners' dilemma breakthrough: AI and renewable energy become key to survival

The current Bitcoin mining industry is experiencing an unprecedented survival test. As BTC prices hover around $87,000, the Hash price has fallen to a historic low of $39.4/PH/s/day—below most miners’ breakeven point of $40—posing a severe challenge of declining gross margins across the entire industry. Although the network hashrate remains above 1 Zettahash, the average cost for miners in Q4 has surged to $137,800 per Bitcoin, with publicly listed miners generally facing negative margins.

Root of the Crisis: Dual Killers of Hashrate Competition and Financing Costs

This market downturn is not solely due to Bitcoin price fluctuations. Analysts point out that the real killer is the accelerated equipment depreciation caused by intensified hashrate competition, compounded by high financing costs in a high-interest-rate environment. Some operators have begun reducing their machine operation frequency to save power, leading to an 8% decrease in network hashrate—reflecting miners’ passive choice to exchange capacity for cash flow.

Small and medium-sized miners, lacking scale effects and financing channels, are the first to be eliminated, and this淘汰 race is accelerating.

Turning Point: AI Hashrate Becomes a “Second Path” for Miners

Amidst the adversity, a group of leading miners have found a breakthrough—shifting their existing power contracts, data centers, and cooling systems from Bitcoin mining to artificial intelligence and high-performance computing (HPC) fields. These infrastructures become natural advantages for transformation.

The performance of typical transformees already reflects this trend:

• Core Scientific: Q3 revenue from HPC/AI accounts for 21%, becoming the main growth engine
• TeraWulf: 14% of revenue from AI business, prioritizing transferring electricity to high-performance computing, even proactively sacrificing some Bitcoin capacity
• Bitfarms: Plans to gradually exit Bitcoin mining by 2027, fully shifting to NVIDIA GPU-supported HPC centers
• Cipher Mining: Aiming to expand to 1.7GW capacity by 2026, mainly serving AI computing, with JPMorgan upgrading its rating to “Overweight”
• Iris Energy (IREN): Although currently only 3% of revenue from AI, its transformation theme has driven the stock price up more than 4 times this year

Luxor Technology CEO Ethan Vera stated plainly that miners are actively “pulling out” Bitcoin machines to supply AI data centers. Galaxy Digital analysts pointed out that compared to Bitcoin’s volatility, AI/HPC contracts offer more stable, predictable cash flows through long-term agreements, and the valuation logic is entirely different—data center operators often achieve 20-25x P/E ratios, far higher than mining valuations. Investors have shifted focus here, and miner stocks are beginning to decouple from Bitcoin, even rising against the trend.

Cost Reduction Innovation: Renewable Energy Becomes a Must-Have

Faced with rising energy costs, miners are accelerating their shift to renewable energy. Rich wind and water resources in Texas, Iceland, Canada, and other regions have become battlegrounds:

• Sangha Renewables: Launched a 20MW solar mining facility in Ector County, Texas
• Phoenix Group: Operating a 30MW hydroelectric plant in Ethiopia
• Canaan and Soluna: Deployed wind power in Briscoe County, Texas, and developed AI-optimized adaptive mining machines

According to Cambridge research, by 2025, over 52.4% of global Bitcoin mining energy will come from renewable sources (wind/water at 42.6%, nuclear at 9.8%), a significant increase from 2022. Electricity costs, which constitute a major part of mining expenses, can be greatly reduced through renewable energy. This transformation not only responds to regulatory and investor ESG demands but also becomes a necessary measure to avoid the fate of facilities like Tether being forced to shut down due to rising energy costs.

Market Segmentation Is Already Evident: Who Will Survive the Next Cycle

TheMinerMag analyst Wolfie Zhao bluntly stated that U.S.-listed miners’ market share is shrinking due to foreign competition, and heavily indebted operators face a “severe” outlook before Q4. However, miners successfully completing their transformation, such as IREN, Cipher, and CleanSpark, are favored by institutions like JPMorgan and Needham, with target prices continuously raised.

The entire industry is expected to see a 35% HPC transition rate by 2026, with a market potential worth hundreds of billions of dollars. Transformation is no longer an option but a matter of life and death.

The ultimate winners will be those cross-industry miners who can successfully leverage their strategic advantages in electricity and land to the hottest AI revolution today. For the blockchain ecosystem, the transformation process of miners itself has become a key indicator of whether the Bitcoin industry is maturing and sustainable.