The once-thriving Bitcoin mining industry, which generated massive profits, is facing a major turning point as leading players retreat from the traditional model and instead bet on new AI infrastructure businesses that can instantly generate revenue by leasing AI processing units.
Previously, Bitcoin mining was highly profitable, but the situation has drastically changed. Data indicates that the cryptocurrency mining business is now squeezed by two main factors, making the old revenue model increasingly untenable.
1) Revenue per hash (Hash Price) continues to plunge sharply.
Revenue per hash, a key indicator of Bitcoin miners’ income, recently hit an all-time low, falling from about $300-400 in 2021 to just tens of dollars projected for 2025-2026.
Furthermore, data from Luxor Technology shows that mining difficulty has dropped significantly, reflecting that some miners have shut down their machines due to unprofitability.
2) Electricity costs triple within a few years.
The Electricity Cost per Bitcoin Mined chart reveals that electricity, a major expense, has risen more than threefold in recent years—from $10,000 in 2023 to $35,000 in Q1 2026. Electricity accounts for about 40% of mining revenue, pushing total costs to just above 90%.
The report also notes that Bitcoin’s own structure worsens the situation. Its volatile price and the Bitcoin Halving mechanism—which halves miner rewards every four years—add pressure by automatically reducing revenue even if other factors remain stable. This means the business faces simultaneous pressures on both "top" (revenue) and "bottom" (cost) lines.
As a result, Bitcoin mining is no longer a high-margin business. Rising costs now consume a large share of revenue, squeezing margins sharply and reducing mining profits to around 60%, down from over 90% during the 2021 bull market, with further decline expected.
As mining becomes less profitable, the rising global demand for AI processing power offers a new opportunity. Because AI’s cost structure—especially electricity per revenue—is much lower, companies are repurposing their existing infrastructure toward AI, leveraging Bitcoin mining’s advantages.
Existing data center infrastructure, including power and cooling systems, plus personnel expertise in managing advanced hardware, allows Bitcoin mining businesses to swiftly pivot from coin mining to renting AI compute units.
In the U.S., leading mining companies have begun this transition. Some are selling held Bitcoin to invest in AI, others are selling mining rigs and becoming full data center service providers, and some have even rebranded to reflect their new direction.
Brian Dobson, Managing Director at Clear Street, believes that in the long term, data center businesses focused on high-performance computing (HPC) and AI will outperform Bitcoin mining in terms of revenue clarity, profit margins, and cash flow.
Senior industry analyst Vasu Kasibhotla from Bloomberg Intelligence notes that the sharp drop in Bitcoin prices combined with rising energy costs accelerates this transition. CoinShares estimates that by December, AI revenue will account for about 70% of total income for U.S.-listed crypto mining companies, up from around 30% currently.
Bitcoin itself will not disappear, and its network will remain secure and operational. However, the role of “miners” is changing, as they face higher costs. The challenges are not just short-term impacts from coin prices or electricity, but structural changes to the business model.
With declining revenue and rising costs, and an alternative industry offering higher profits and faster growth, moving away from Bitcoin mining toward AI is not just a new option—it may become the only viable survival path for players in this sector.
Source of information Bloomberg
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