Miners Abandon Bitcoin for AI Hosting Gold Rush

Bitcoin's network hashrate, a measure of its combined computing power, has retreated significantly from record levels. According to CryptoQuant analyst Maartunn, it has dropped by approximately 17% from its all-time high. This decline is also reflected in other trackers, which show hashrate easing from over one zettahash per second to around 850-920 exahashes per second.

The decline in hashrate follows a period of poor profitability for miners. Publicly listed mining companies were reportedly losing $19,000 on every Bitcoin produced as of late March, with an estimated weighted average cash cost of $80,000 per coin against a spot price well below that level at the time.

In response to these challenges, many miners are shifting their focus towards AI and high-performance computing hosting. Companies such as Hut 8, Core Scientific, TeraWulf, and IREN have signed multibillion-dollar agreements for this purpose. Hut 8's contracted AI infrastructure portfolio has grown to $26.6 billion, with cumulative AI and HPC contracts across the public mining sector exceeding $70 billion.

The shift towards AI hosting is driven by the fact that mining facilities already provide cheap electricity access and existing grid connections, making them ideal locations for AI data centers. According to research firm CoinShares, listed miners could generate up to 70% of their revenue from AI and HPC work by the end of 2026.