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From Crypto to AI: Miners Chase New Gold
15 Apr
Summary
- Miners are shifting revenue focus to AI infrastructure.
- AI offers higher profit margins than Bitcoin mining.
- Companies are rebranding and divesting Bitcoin assets.
Companies that once built billion-dollar businesses mining Bitcoin are now on track to generate the majority of their revenue from artificial intelligence by the end of this year. This marks a significant pivot away from the cryptocurrency that initially fueled their growth.
The transition is accelerated by falling token prices and escalating energy costs, which have driven down revenue from validating blockchain transactions. In contrast, providing infrastructure for AI firms now promises substantial financial returns.
Industry analysis suggests AI will constitute roughly 70% of publicly listed miners' combined revenue by December, a significant increase from today's 30%. This shift is driven by the stark difference in profit margins: Bitcoin mining margins have collapsed to around 60%, while AI cloud operations boast mid-80% margins.
This economic disparity is further highlighted by the cost structure. Electricity consumes approximately 40% of mining revenue, pushing total costs to the high 90% range. For AI cloud operators leasing high-powered chips, these operational costs are in the low single digits.
Furthermore, Bitcoin's built-in reward halving mechanism, which reduces miner payouts every four years, creates a continuous margin squeeze. The most recent halving occurred in 2024, with another expected in 2028, unlike the AI business which lacks such inherent revenue reduction.
Major miners are actively responding to these economic pressures. Some, like Bitfarms, have rebranded to Keel Infrastructure Corp. Others, such as Cipher and MARA Holdings Inc., are divesting Bitcoin assets and stockpiles to focus on developing AI data-center infrastructure.
Shares of miners that have successfully transitioned to AI data-center operations have reached record highs. Companies like TeraWulf Inc., IREN Ltd., Cipher, and Hut 8 have secured multi-year contracts with tech giants like Google, Microsoft, and Anthropic, projecting billions in revenue.
This transition represents the end of an era for many large US miners, forcing them to adapt their operational models to a different capital and energy market environment, prioritizing visibility, better margins, and stronger cash flows from the data center business.
