Margins under pressure
Bitcoin miners’ profit margins boil down to two variables: the cost of electricity and the price of Bitcoin. Miners that can access cheaper power and operate more efficiently can outperform and outlast those who cannot. At current prices, a large part of the global hash rate is sitting close to breakeven, which means small moves in energy prices or Bitcoin can quickly determine who survives and who has to switch off their machines.
With increasing capital for AI fuelling demand for data centres, US electricity prices are rising.
US electricity prices in the industrial sector (Jan 2020 to Jul 2025; Source: EIA)
Miners tend to strategically position themselves next to data centres and power supply. Bloomberg reported in September that wholesale electricity was more than 2.5 times the cost of five years ago in areas near data centres. In some regions, miners are no longer just competing with each other for cheap power – they’re vying with enormous AI data centres held by the likes of Amazon, Microsoft, and Meta. These internet platform giants have superior balance sheets and are more likely to sign long-term contracts.
MacroMicro, an analytics platform, reported the total production cost of Bitcoin at $108,900 as at 17 Nov – far above Bitcoin’s trading price of $95,000 at the time. The costs are estimated to have risen 20% since the beginning of the year.
Bitcoin plunge
Bitcoin reached an all-time high of $126,000 in early October before correcting to almost $80,500 by the end of last week. If mining costs continue to rise, or if the price of Bitcoin falls further, some miners will have to continue operating at a loss or close. In practice, that means the least efficient rigs and the most expensive power contracts will be cut first, pushing hash rate lower and gradually lifting margins for those left standing.
Since the Bitcoin halving event in April 2024, the rewards for mining one were halved, and incentives for miners are becoming decreasingly favourable. Revenue per unit of power dropped sharply immediately after the halving and, while higher Bitcoin prices have helped, the industry is still dealing with a net cut in income that is unlikely to reverse.
Bitcoin miner revenue per TH/s (Jan 2020 to Nov 2025) (Source: Coin Metrics)
Data from Coin Metrics show revenue per terrahashes per second (TH/s) spiking in bull markets, then dipping after each halving. The April 2024 halving knocked revenues down to about five cents per TH/s, a level not seen before.
Mining difficulty (Jan 2020 to Nov 2025) (Source: Coin Metrics)
Mining one block is becoming ever more difficult. When a miner finds a block, they are rewarded with 3.125 bitcoins. That compares with 6.25 in early 2024 and will drop to 1.5625 after the next halving event in 2028. The rise in the level of difficulty has been almost continuous over the past five years, underlining how aggressively miners have added new machines whenever margins recovered.
From miners to AI compute
As the squeeze wraps around miners, it has become increasingly difficult to justify a business model so vulnerable to price swings of the product. That’s why so many players have pivoted their strategy to cloud and compute services, as demand for AI-driven services swells. In effect, miners are discovering that the scarce asset they control is not just hash power, but access to cheap, stable electricity and facilities that can be turned into data centres.
In the past few years, large players such as IREN, Core Scientific, HIVE Digital, , and Hut 8 pivoted their business models to focus on AI cloud services, taking advantage of their facilities initially built for mining. On 13 Nov, Bitfarms, too, announced its pivot from mining to AI compute. Very few firms have stuck to a pure-play mining business model.
Some operators now report they can earn more per megawatt from hosting AI or other high-performance computing (HPC) workloads than from mining, especially once the cost of new ASICs (Application-Specific Integrated Circuit) and the impact of halvings are taken into account.
“We’re quite bullish on the GPU cloud market, which we see as one of those rare opportunities which only come along every few decades,” said Aydin Kilic, CEO of HIVE Digital in a 2023 statement.
For now, Bitcoin and AI are competing for the same scarce inputs: capital investment, chips, and power. If more miners divert a portion of their capacity to AI, the growth in global hash rate could slow, which would support miner margins. On the other hand, if AI income becomes large enough, it could also allow some firms to keep mining through deep drawdowns, because they can subsidize losses with cloud revenue. That would make miners less sensitive to short-term price moves and could change how quickly hash rate reacts to a falling Bitcoin price.
Mean hash rate (30-day) (Source: Coin Metrics)
So far, mean hash rate has continued to climb through halvings and price swings. Any plateau or decline from here, in the face of rising AI investment and power costs, would be an early sign that the squeeze is forcing capacity out of the network.
This raises the question of how the Bitcoin price will react as more miners pivot to AI. In the short term, the pivot looks like a hedge where miners gain a second revenue stream that alleviates their exposure to the digital asset, which can make their shares trade more like data centre or tech infrastructure stocks. Over a longer horizon, if enough energy and investment are pulled away from mining into AI, investors may start to worry about whether the growth in hash rate is keeping up with Bitcoin’s market value.
Bitcoin price and total market cap of bitcoin miners (Jan to Oct 2025)
While Bitcoin has pushed to new highs the combined market cap of listed miners has lagged and become more volatile, reflecting the shift towards AI and other income streams. Analysts from JPMorgan have pointed out that mining stocks are decoupling from the price of Bitcoin as they pivot to other income streams. A miner that earns half its revenue from AI hosting will not move as closely with Bitcoin anymore. That may suit equity investors looking for diversification, but it means Bitcoin exposure is gradually moving away from miners and towards other holders, such as companies (DATs) and .
Regulation, power and emissions
Bitcoin mining has long been under scrutiny for its energy use. AI is now joining it in the spotlight. Research by de Vries-Gao estimates data centres could consume more electricity than all of France by the end of 2025, which, together with crypto, has put the sector on policymakers’ radar.
Bitcoin emissions (MtCO2e). Note: 2025 data is year-to-date as at 12 Nov.
(Source: Cambridge Centre for Alternative Finance)
The International Monetary Fund (IMF) and a UN task force have discussed special taxation on crypto mining power use. Proposals include raising funds for climate action and nudge miners towards cleaner energy. If such initiatives were to gain traction, miners that rely on fossil-heavy grids could face higher costs or constraints, while those in regions with renewables could be in a stronger position, although defining the competent authorities and persuading countries to go along with implementing a global tax on anything would be extremely difficult. The Trump administration has not even bothered to attend this year’s global climate talks in Brazil.
Where are miners?
Hashrate Index reported earlier this year the countries most engaged in mining are the US, Russia, and China.
Heat map of Bitcoin mining by hash rate
According to BitcoinMiningStock, six of the ten largest listed miners (by hash rate) are American, while others are mainly located in Asia-Pacific and Canada. This concentration means a handful of grids and regulators now effectively underwrite a large part of Bitcoin’s security.
Many American miners operate in Texas, where electricity prices are a bargain relative to other states. Texas has the third-cheapest commercial electricity prices in November, according to Electric Choice. The state’s flexible power market and growing wind and solar capacity have turned it into a magnet for both miners and data centres. In return, miners are increasingly expected to act as flexible demand that can power down during grid stress, which gives them a new role as a kind of informal shock absorber for the local electricity system.
Some miners choose to hold onto their product, to speculate on the digital asset’s price. The largest include:
(Source: Bitbo, 24 Nov)
During periods where Bitcoin’s price drops, this puts additional pressure on miners, as they have to hold the asset while continuing to incur mining costs. In an AI-first world, these treasuries could start to play a different role: some firms may sell down their Bitcoin holdings to fund GPU purchases and data centre development, while others may lean on AI cashflows to hold even more Bitcoin through the cycle.
Bitcoin mined per company (Jun 2023 to Nov 2025). Note: Certain gaps in data reflect omissions of Bitcoin production reports, rather than a halt in production.
If the current trend continues, the next phase of Bitcoin mining may look less like an industry of pure play miners and more like a cluster of large, power-hungry infrastructure companies that rent out their capacity to the highest bidder, whether that is the Bitcoin network or an AI model. For Bitcoin itself, the question is whether that shift leaves the network stronger – backed by deep-pocketed, diversified operators – or more exposed to outside shocks in energy, regulation, and technology. In other words, the AI pivot is both a lifeline for miners and a new risk for Bitcoin’s long-term security.
