The Bitcoin mining industry is experiencing significant pressure as the ongoing cryptocurrency downturn pushes miners into unprofitability. In response, companies across the sector are reducing hardware operations to mitigate cash burn. The hash price, a key metric indicating miner revenue per unit of computing power, has recently fallen to its lowest recorded level.
According to reports, the median cost of mining, which encompasses expenses for equipment, energy, and debt servicing, has surpassed this revenue level. This situation leaves a substantial number of publicly traded mining companies operating at a financial loss.
In reaction to the declining income, mining firms are actively slowing down their machinery to conserve energy. Ethan Vera, chief operating officer at Luxor Technology, stated that the decrease in hash price has led to an approximately 8% reduction in network hashrate. This is attributed to miners employing firmware to underclock their machines, thereby saving power. Vera further explained that the current downturn compels operators to maximize the efficiency of every kilowatt and to trade used mining rigs to maintain financial stability.
Miners Adapt Revenue Streams to AI Infrastructure
A primary source of pressure on the mining sector is the April 2024 halving event. This recurring event, occurring every four years, reduces the Bitcoin reward miners receive for validating blocks, fundamentally altering the economics of their operations.
Many mining companies are now integrating hybrid setups that include artificial intelligence (AI) and high-performance computing (HPC). This strategic shift has contributed to a rise in their stock values earlier this year, even as their core Bitcoin mining revenue has diminished.
Companies that have diversified into operating AI data centers have attracted billions of dollars for facility expansion. However, Bitcoin mining continues to represent the majority of their income.
For instance, Core Scientific reported that approximately 21% of its third-quarter revenue was generated from high-performance compute services. Terawulf derived 14% of its revenue from a similar source. IREN Ltd., which experienced a more than fourfold increase in its stock price this year, generated around 3% of its revenue from high-performance computing, based on estimates from TheMinerMag.
TheMinerMag also indicated that the break-even prices for 14 tracked miners increased by approximately 20%. This brought the average break-even price to around $90,000 per Bitcoin during the third quarter.
Considering that Bitcoin averaged $104,000 in the fourth quarter so far, a decrease from $114,000 in the preceding quarter, and was trading around $92,000 on Wednesday, most miners are currently falling short of profitability.
Mike Colonnese, managing director of equity research at HC Wainwright & Co., commented that investors showing interest in these companies in recent months are primarily focused on their AI businesses, with minimal concern for their Bitcoin mining operations. Colonnese anticipates that miners will increasingly transition to AI data centers and phase out mining machines over the coming years.
Industry Pullback and Rise of Non-US Miners
Publicly traded mining companies are also working to decouple their stock performance from Bitcoin's price movements. This is occurring as an increasing number of facilities previously dedicated to Bitcoin mining are being repurposed to support AI operations.
Companies such as Core Scientific, Terawulf, IREN, and Cipher Mining have secured long-term contracts with major technology firms like Google and Microsoft. These agreements are designed to host AI demand and are expected to generate billions of dollars in revenue.
Wolfie Zhao, an analyst at TheMinerMag, observed a fundamental shift within the Bitcoin mining sector, with many prominent players exiting the core mining business. Zhao highlighted that Bitfarms Ltd. recently announced plans to gradually cease its mining operations over the next few years to focus on building new AI centers.
Other mining companies that were previously pursuing aggressive expansion strategies have paused their growth announcements. Zhao noted that private companies operating outside the United States are now contributing a larger share to the global hashrate, as U.S.-listed operators face increasing challenges.
Ethan Vera stated that companies with smaller financial reserves and significant debt burdens are likely to face the most severe difficulties. He predicted a challenging fourth quarter for many miners, particularly those whose GPU businesses have not yet generated any revenue.
The mining boom experienced in early 2021 transformed the sector into a multibillion-dollar industry. During that period, companies invested heavily in specialized mining hardware, constructed extensive data centers, and secured substantial power resources across the nation.
Currently, some of these same facilities are being repurposed for AI-related activities, while others necessitate entirely new construction projects.
More than 95% of all Bitcoin that will ever be created has already been mined. Once the final Bitcoin is mined, projected to occur around the year 2140, miners will solely depend on transaction fees for their revenue.
Wolfie Zhao concluded that with a finite supply of Bitcoin to be mined, AI demand presents a more promising opportunity, given its significantly larger market potential, unless Bitcoin prices experience extraordinary growth.

