Bitcoin mining is getting harder for everyone except the miners who were already good at it. That's the story tucked inside the quarterly earnings figures Phoenix Group released this week: as a wave of higher-cost competitors has been forced offline by tightening margins, the Abu Dhabi-listed miner has quietly become more efficient, not less, and is now using that edge to fund a very different bet, on European artificial-intelligence infrastructure rather than Bitcoin alone.
Phoenix Group Bets Its Mining Windfall on European AI Pivot
17 July 2026 - 11:50 CEST
By Stu Clelland
Shrinking field, and Phoenix takes a bigger slice
The Bitcoin mining industry runs on a brutal logic: the network's total computing power, known as hash rate, keeps rising as miners compete for a fixed reward, until the least efficient operators can no longer cover their power bills and are forced to shut down. That culling has been happening at scale. The global hash rate has fallen around 18% from its peak late last year, as higher-cost machines across the industry have gone dark.
Phoenix has used the retreat to its advantage. With less competition for the same pool of rewards, the company's share of Bitcoin mined has grown, and its self-mining margins have held firm even as its topline revenue fell, a sign that its own operations were never the weak link to begin with. It is the kind of quiet resilience that rarely makes headlines on its own, but sets up the more interesting move Phoenix is making with the advantage it has built.
From mining rigs to AI data centres
Phoenix has spent the past two years building one of the more efficient Bitcoin mining operations in its class, but the company's real ambitions now lie elsewhere. It is in the early stages of a pivot toward AI and high-performance computing infrastructure, the same power-hungry, large-scale compute business that mining has always been, but pointed at a different customer.
The clearest evidence of that shift is Project Lyon, Phoenix's first European AI data centre, developed in partnership with DC Max, a French data centre investor, developer and operator with a roughly 2-gigawatt portfolio and backing from a group with more than €6bn in investment experience. The two companies structured the tie-up, announced in May, as a repeatable development model rather than a single project: DC Max brings site sourcing, permitting and grid-access expertise, while Phoenix supplies capital and operational scale, together targeting more than 1 gigawatt of AI and high-performance computing capacity across Europe and the Gulf, an opportunity the companies value at around $8bn.
The Lyon site itself cleared a real hurdle this quarter: the corporate structures needed to operate in France and Luxembourg are now in place, and the site has secured its grid connection, the electricity supply that any data-centre project lives or dies by. Construction is due to begin this month, with delivery targeted for late 2027 or early 2028. Phoenix has described the site as the first foothold in the wider Europe-and-Gulf buildout still largely on paper.
Phoenix is also sitting on a stake that has quietly become a source of AI-adjacent value in its own right: a 13.5% holding in Bitzero, another mining and AI infrastructure company, which jumped in value after Bitzero listed on the Nasdaq under the ticker AIBZ in June. It is the kind of position that lets a mining company benefit from the AI infrastructure boom without having built a single data centre of its own, at least not yet.
Caveat the numbers don't explain
None of this comes without tension. Phoenix's own auditor flagged, in reviewing its interim accounts, that the company's ability to meet its obligations rests on generating enough cash through mining and selling digital assets, standard language for a crypto miner, but a reminder that the AI pivot is being funded by a business whose revenue is still falling.
Sandmark has contacted Phoenix Group for further details on the drivers behind the loss, and will update this article if a response is received.
