Bitcoin miners are abandoning mining and moving to the cloud.

Original author: Tiger Research

Original translation by: AididiaoJP, Foresight News

As Bitcoin prices continue to decline, many miners are facing an existential crisis. Faced with increasingly fierce competition in core mining, how can these companies save themselves? Artificial intelligence (AI) data center leasing has become a highly anticipated transformation path.

Key conclusions

• Bitcoin mining revenue is unstable while costs continue to rise, making the core business model unsustainable.
• Mining companies are starting to utilize existing sites and infrastructure to lease data center space to large technology companies.
• This transformation has alleviated cutthroat competition and helped improve the health and stability of the entire industry.

I. Core Operational Risks Faced by Mining Enterprises

The relatively simple business model of Bitcoin mining companies constitutes their fundamental vulnerability. Their revenue is almost entirely tied to the volatile price of Bitcoin, making it highly unpredictable; while costs, including increasing mining difficulty, rising electricity prices, and hardware upgrades, show a rigid upward trend.

The problem becomes particularly acute when cryptocurrency prices fall: revenue plummets while costs soar, creating a "squeeze from both ends" dilemma. Furthermore, regulatory risks are ever-present. For example, New York State's proposed increase in mining sales tax, while having a limited impact on mining companies currently concentrated in less regulated regions like Texas, foreshadows potentially broader compliance pressures in the future.

All of this forces mining companies to consider a fundamental question: can a single mining business model be sustainable in the long term?

II. Cost Inversion: Increasingly Fragile Profit Structure

According to data from CoinShares, the average cost of mining one Bitcoin has now risen to approximately $74,600. If costs such as equipment depreciation are included, the total production cost approaches $130,000 per Bitcoin.

However, Bitcoin is currently priced at around $91,000. This means that for every Bitcoin produced, mining companies face a loss of approximately $46,000. Increased mining difficulty and tightening energy policies have further exacerbated the cost structure, leading to an increasingly fragile overall profitability for the industry.

III. The Path to Transformation: Why AI Data Centers?

The intensifying AI race has spurred explosive demand for data centers from tech giants. Building data centers in-house is time-consuming, while market opportunities are fleeting, making leasing existing, rapidly adaptable facilities the preferred option.

Mining companies' existing assets perfectly match this demand:

• Computing hardware: Possesses a large number of high-performance GPUs (such as NVIDIA chips) that can be used for AI computing.
• Electricity resources: Hundreds of megawatts of grid access have been approved, which is a scarce resource in today's energy market.
• Heat dissipation capability: The heat dissipation experience accumulated from operating high-power mining machines can be directly applied to managing AI servers such as H100/H200.

A prime example is Core Scientific, which, after teetering on the brink of bankruptcy, successfully turned a profit by transforming into an AI data center leasing company. It now operates approximately 200 megawatts of capacity and plans to expand to 500 megawatts. Companies like IREN and TeraWulf are also exploring similar business diversification paths. This is not only about pursuing growth, but also a necessity for survival.

IV. Diverse Evolution: Beyond Data Centers

The shift towards AI data center leasing is a mainstream trend, but not the only way forward. Essentially, it's a rational choice for mining companies to reallocate capital to more efficient areas. Stable data center revenue provides a cash flow buffer for mining companies, allowing them to strategically hold Bitcoin assets more comfortably and avoid being forced to sell during market downturns.

Meanwhile, some mining companies, such as Bitmine and Cathedra Bitcoin, are exploring expansion into broader digital asset technology (DAT) business models. These diversification attempts all point to a trend: weak, pure miners are being eliminated or transforming, leading companies are evolving into comprehensive service providers, and the entire cryptocurrency mining industry is moving towards a more mature and resilient new phase.