Bitcoin Miners Ditch Crypto Roots for Lucrative AI Contracts

Bitcoin miners are undergoing a significant transformation as they transition from crypto mining to artificial intelligence (AI) infrastructure. According to CoinShares, public listed Bitcoin miners will generate approximately 70% of their combined revenue from AI by December, up from about 30% currently.

This shift is driven by the lucrative prospects of AI and high-performance computing contracts, with over $70 billion in cumulative deals announced across the public mining sector. The transition follows a brutal quarter for miners, with hashprice, the measure of daily revenue per petahash, falling to around $29, levels last seen after the April 2024 halving.

Hashprice is crucial as it affects the profitability of miners. Bitcoin mining gross margins have dropped to roughly 60%, down from above 90% during the 2021 bull run. Industry experts believe AI offers structurally higher and more stable returns, with cloud margins near 85%. James Butterfill, CoinShares head of research, noted this shift.

Several companies are aggressively moving into AI infrastructure, including Core Scientific, TeraWulf, Hut 8, and MARA Holdings. These companies have secured significant contracts worth tens of billions of dollars. For instance, Core Scientific expanded its CoreWeave deal to $10.2 billion over 12 years, while TeraWulf has $12.8 billion in contracted HPC revenue.