The U.S. Bitcoin mining industry is facing historically low margins as hash rates climb to an all-time high, driving down profits. To survive, miners must diversify their revenue streams.
Miners already command massive energy contracts, cooling systems, and large-scale data center infrastructure. By reallocating or dual-purposing, miners can offset declining margins with steadier, higher-margin AI income.
This pivot is proving enormously successful for some companies, with the total market cap of fourteen US-based mining companies exceeding $50B for the first time in September. That’s a 43% rise from August for these mining stocks. Clearly there’s an opportunity here that’s already paying off.
The State of Bitcoin Mining in the US
Bitcoin mining is a historically brutal business. According to Glassnode’s Difficulty Regression Model, miners experience protracted periods of operating losses during bear markets. Glassnode’s model does not even include debt-servicing, as many miners have to raise debt to cover substantial start-up costs.
For years, miners have had no choice but to continue mining Bitcoin at a loss during bear markets. So far in 2025, despite Bitcoin’s nearly twenty percent price growth, average miner profitability has dropped by at least ten percent. The seemingly inexorable rise of the hashrate has squeezed margins regardless of Bitcoin’s bullishness.
The Rise of AI and Compute Demands
According to a recent McKinsey analysis, companies will need to invest $5.2 trillion by 2030 (more than a trillion a year) to meet worldwide AI demand. More than 40 percent of that investment will likely take place in the United States.
Goldman predicts that data center utilization will hit a staggering 95 percent by 2026. It’s clearly a supply-constrained market, and any new data-center supply will instantly be snapped up as demand for high performance compute balloons.
As AI is largely a hardware arms race, the repurposing of existing mining infrastructure is a highly profitable move.
BTC Mining Facilities as the Solution
The top Bitcoin miners by operating margin all have one thing in common: diversification to high performance, AI focused compute. Bitcoin mining is a narrow business, requiring specialized ASICs built exclusively for mining Bitcoin. But the enormous energy, warehousing, and cooling capabilities of a mining facility can be largely repurposed to run the multi-purpose GPUs required for high performance computing. It’s not surprising then that Wall St. analysts expect some twenty percent of Bitcoin mining facilities to pivot to AI by 2027.
That said, not all Bitcoin mining facilities are well-suited for AI processing needs. While Bitcoin mining requirements mostly center on sufficient power, AI processing is more nuanced and demands a more skilled workforce and a geographic location that can service the demand (i.e. it wouldn’t make sense to transition a Bitcoin mining facility in the arctic circle thousands of miles from any human users into AI processing).
But the vast majority of Bitcoin mining companies have the facilities and power requirements to incorporate AI processing, which is fortunate for the AI industry because its compute needs are astronomical. Hive Digital has already begun on the pivot, recently announcing a three-fold increase in their AI revenue year-over-year. Their digital currency mining revenue, by contrast, dropped five percent over the same time period.
Core Scientific is another. Long a Bitcoin mining powerhouse, they filed chapter 11 bankruptcy during the 2022 bear market. After restructuring, they emerged in 2024 with a renewed focus on high performance compute to complement their mining business. In a recent report from finimize, Core Scientific is posting monstrous 75-80 percent operating margins in its AI business, generating $290 million in annual AI revenue as its Bitcoin revenue plummets.
That doesn’t mean that mining companies are completely abandoning Bitcoin. In 2024, Hut8 launched Highrise AI, a GPU-as-a-service subsidiary backed by over 1,000 H100s. But its Bitcoin mining business remains primary, with AI serving as a secondary, complimentary revenue strategy. Bittensor has implemented the best model for how a Bitcoin company can pivot to being a compute provider for AI in a way that also retains the spirit of decentralization that Bitcoin is known for.
Bitcoin Mining and AI Processing Use Enormous Amounts of Energy
The energy consumed by Bitcoin mining is understandably alarming to environmentalists. But by some estimates, AI is set to surpass Bitcoin mining in this unenviable category by the end of 2025. A 2024 Goldman report estimated that data centers, largely driven by AI expansion, could draw eight percent of the US power grid by 2030. A staggering sum that puts the Bitcoin footprint to shame.
Notoriously difficult to estimate, the US Energy Information Association put the percentage of US energy that cryptocurrency (mostly Bitcoin) mining uses at between .6 and 2.3 percent. It’s clear at least some fraction of the growing AI energy draw could be offset by transitioning existing Bitcoin infrastructure to AI.
In 2021, Bitcoin mining startup MintGreen made headlines by claiming they could recycle 96 percent of the energy used to mine Bitcoin in the form of thermal energy to heat homes in North Vancouver, Canada. The promise of recycling mining energy, especially in colder climates where heat is used much of the year, is tantalizing. And profitable.
Renewables are also central to sustainable Bitcoin mining. Many top miners including Terawulf, Gyphon, Cleanspark, Iris and Bitfarms, claim over 90 percent of their energy inputs come from renewable sources. In some cases, credibly demonstrating full carbon neutrality.
The most profitable companies will learn how to recycle energy into useful, secondary profit sources, like reselling it to the grid, or funneling it directly as thermal heat to warm buildings in cold climates.
Bitcoin’s meteoric rise to a $2 trillion asset means mining is not going anywhere anytime soon. Block transaction fees (which are separate from the fixed, 3.25 BTC block reward) are notoriously volatile, and recently dropped to below 1 percent of total miner revenue. But miners will still receive a minimum of 325,000 Bitcoin per year until the next halving in 2028, or $40 billion a year at current prices (roughly equivalent to Uber’s revenue).
But as AI goes parabolic, repurposing mining facilities is crucial to the long term viability of these businesses, and to minimizing environmental impact. It’s now clear miner diversification is key, and AI is where it will come from.