AI Swallows Bitcoin Mining: Miners in Crisis 🚀💸

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Welcome, dear reader, to the morning briefing where the crypto world dances on the edge of a knife… or is it a mining rig? 🧠⚡

Grab a coffee (or a shot of vodka) to read how Bitcoin mining is now a high-stakes game of survival. Skyrocketing costs, collapsing fees, and AI’s sly grin are forcing miners to rethink their playbook, turning once-stable operations into a chaotic battleground for next-gen compute power. 🤖📉

Crypto News of the Day: AI Takes Over Bitcoin Mining Racks as Costs Explode and Profitability Craters

The CoinShares Bitcoin Mining Report Q4 2025 paints a grim picture: the sector has hit its breaking point. Production costs have surged to all-time highs, hash price has collapsed, and AI is now outbidding miners for their own infrastructure, triggering the most dramatic structural shift the sector has ever faced. 🕳️💸

The industry entered Q2 2025 with a brutal new reality:

  • The average cash cost to mine one BTC among public miners jumped to approximately $74,600. Oh, how the mighty have fallen! 🤡💰
  • All-in costs soared to $137,800. A fortune for a digital token! 🧾
  • Transaction fees, once a buffer for miner revenue, fell below 1% of block rewards in May and June, the weakest contribution since the 2024 halving. A true “feast or famine” scenario. 🍽️

Yet even as margins collapsed, the Bitcoin network continued to climb, smashing through 1 Zetta hash/s for the first time in August. A paradox of progress, if ever there was one. 📈🌀

Public miners contributed only about 80 EH/s of year-to-date growth, meaning most of the expansion is now coming from private operators, sovereign miners, and well-capitalized energy players with vastly cheaper power. The rich get richer, and the miners? Well, they’re just trying to keep up. 💸

The result: miners are being diluted by hashrate growth they are no longer driving. A tale as old as time… or at least as old as cryptocurrency. 🔄

AI Moves In – And It Pays 10-20× More Per Megawatt

A far bigger disruption is unfolding at the infrastructure level. Industrial-scale mining campuses, comprising 100MW to 1GW sites, share nearly identical power, cooling, and rack density requirements with modern AI datacenters. Essentially, the same building, but now with a smarter tenant. 🤖🏢

That overlap has turned mining facilities into prime targets for hyperscalers. Deals from Google-TeraWulf, Google-Cipher, and multi-site agreements with Fluidstack signal the same direction: big-tech is moving into miner-built capacity at a premium. A classic case of “the enemy of my enemy is my friend… until they take my spot.” 🤝

The math explains why. Bitcoin mining yields roughly $1 million per megawatt, while AI compute generates $10 million to $20 million per megawatt. No miner can ignore that spread. It’s a numbers game, and AI is holding all the cards. 🃏

Industry Splits: AI Megacampuses vs. Mobile, Ultra-Low-Cost Miners

The sector is now diverging into two clear models:

  1. 1. Megascale miners → fully or partially converting to AI/HPC. These facilities can upgrade their electrical topology and uptime standards to meet enterprise requirements. They’re signing decade-long contracts and shifting from volatile block rewards to stable, capacity-based revenue. A safe bet, if you’re not a gambler. 🎰

2. Low-cost, mobile miners → shifting to stranded energy. Miners unable to compete with AI are moving off-grid: flare gas, remote hydro, and surplus renewables. Portable rigs are being deployed everywhere cheap energy exists, echoing mining’s early decentralized roots. A return to basics, but with more stress. ⛓️

This migration marks a long-term reshaping of the industry, and not a temporary cycle. A lesson in adapt or perish. 🐢

According to a CoinShares report:

  • Hashprice averaged approximately $50 per PH/s/day throughout Q2, continuing its post-halving slide. A slow burn, but a burn nonetheless. 🔥
  • With difficulty rising, fees stagnant, and Bitcoin trading mostly sideways, older ASIC fleets have been forced offline. The old guard is being replaced by the new wave. 🚶‍♂️

Analysts expect hashprice to remain range-bound between $37-55 per PH/s/day through 2028 unless BTC rallies far faster than hashrate growth. A waiting game, but with high stakes. 🎯

A Structural Shift: AI Outbids Bitcoin

For the first time in Bitcoin’s history, miners are being priced out of their own infrastructure. AI’s superior economics, hyperscaler deal flow, and the rising cost of industrial mining are pushing the industry into a permanent transformation. A revolution, if you will. 🚀

The Bitcoin network remains strong, where hashrate is still climbing, but the business of mining is being rewritten fast. A tale of two technologies: one fading, the other rising. 🌅

This puts miners at an impasse, to either go big into AI, or go remote into stranded power. The choice is clear… or is it? 🤷‍♂️

Chart of the Day

Byte-Sized Alpha

Crypto Equities Pre-Market Overview

Company At the Close of December 2 Pre-Market Overview
Strategy (MSTR) $181.33 $185.83 (+2.48%)
Coinbase (COIN) $263.26 $269.39 (+2.33%)
Galaxy Digital Holdings (GLXY) $25.36 $25.90 (+2.13%)
MARA Holdings (MARA) $11.91 $12.27 (+3.02%)
Riot Platforms (RIOT) $15.22 $15.55 (+2.17%)
Core Scientific (CORZ) $15.82 $16.03 (+1.33%)

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2025-12-03 19:14