Bitcoin miners face hashprice collapse: New AI revenue helps miners survive
Bitcoin Miners Navigate Hashprice Decline with AI Diversification
📌 Hash Price Decline Pressures Bitcoin Miners
The Bitcoin mining industry is currently facing increasing challenges as hashprice, a critical metric for profitability, is decreasing. This decline could force smaller miners offline and impact mining equipment providers and service partners. The current situation highlights the ever-evolving economics of Bitcoin mining and the need for miners to adapt to survive.
According to recent industry reports, hashprice—the expected daily revenue per unit of computing power—has fallen to approximately $42 per PH/s. This represents a significant drop from over $62 per PH/s in July. For context, hashprice is a key indicator as it reflects the revenue a miner can expect to earn for every unit of hashing power contributed to the network. When hashprice decreases, miners earn less for their computational efforts, directly impacting their profitability.
This dip towards the $40 mark is forcing less efficient and smaller miners to consider shutting down their operations. Reports indicate that when revenue declines to this extent, operators with already thin profit margins struggle to cover expenses such as electricity and maintenance. This situation is especially critical for miners who operate older, less efficient hardware or who are located in regions with high electricity costs.
Hardware manufacturers and hosting firms are also feeling the impact. After the market's slide in October, demand for mining equipment has slowed, and any income linked to Bitcoin has lost value. In response, some manufacturers, such as Bitdeer, are expanding their self-mining operations to compensate for the decrease in sales. This approach allows them to utilize their equipment and generate revenue directly, albeit with the added risk of Bitcoin price volatility.
📌 Miners Pivot to AI Compute
The challenges in Bitcoin mining are exacerbated by high capital expenditures and continuous increases in hashrate. These factors make running ASIC farms increasingly difficult, especially after the April 2024 halving, which reduced the block reward to 3.125 BTC. Historically, the block reward was significantly higher, starting at 50 BTC in 2009, making mining accessible even with CPUs. Today, however, specialized hardware is essential for most operators to remain competitive.
This shift in the mining landscape has prompted some companies to repurpose their capacity for general compute tasks, particularly in the realm of Artificial Intelligence (AI). The computational power required for AI workloads aligns well with the capabilities of mining hardware, providing an alternative revenue stream for miners.
⚖️ Large-scale deals indicate the emergence of this trend. For example, Cipher Mining signed a $5.5 billion, 15-year deal to supply compute power to Amazon Web Services in October. Similarly, IREN agreed to provide GPU services to Microsoft in a contract valued at $9.7 billion. These strategic moves are designed to secure consistent revenue streams, especially during periods of diminished Bitcoin mining profitability.
📌 Market Slump Exacerbates Miner Challenges
Adding to the miners' difficulties is the recent weakness in Bitcoin's price. The cryptocurrency briefly dipped below $100,000, trading as much as 20% below its October 6 high of over $126,000. This price volatility directly affects miners' profitability, as the value of their mined Bitcoin decreases.
Analysts attribute this price decline to substantial selling by long-term holders. According to Compass Point analyst Ed Engel, net sales from this group have exceeded 1 million Bitcoin since late June. This selling pressure, coupled with a large liquidation of leveraged positions on October 10, further destabilized the market and breached support levels near $117,000 and $112,000.
Markus Thielen, founder and CEO of 10X Research, notes that the market's inability to reclaim critical levels indicates bearish conditions. His firm maintains that Bitcoin could experience further declines before reaching a bottom. They had previously predicted a drop to $100,000 and now anticipate a "buyable bottom" to be "a few weeks away."
📌 Stakeholder Positions
| Stakeholder | Position | Impact on Investors |
|---|---|---|
| Smaller Bitcoin Miners | Struggling; considering shutting down rigs | 📈 Potential for increased centralization; reduced network resilience. |
| Hardware Manufacturers | Facing slowing demand; expanding self-mining | 📈 May lead to innovations in mining technology and increased efficiency. |
| Large Mining Firms (e.g., Cipher, IREN) | Diversifying into AI compute | Provides revenue stability; reduced reliance on Bitcoin price. |
| Long-Term Bitcoin Holders | Selling holdings | Adds downward pressure on Bitcoin price; affects miner profitability. |
📌 🔑 Key Takeaways
- Hashprice decline is squeezing Bitcoin miner profitability, particularly for smaller operators.
- Miners are increasingly diversifying into AI compute to stabilize revenues, signaling a significant shift in the industry.
- Bitcoin's price weakness and long-term holder selling are compounding challenges for miners and the broader market. Expect continued volatility in Bitcoin prices and mining stocks.
- Major deals like Cipher Mining's and IREN's with AWS and Microsoft highlight the potential for miners to leverage their infrastructure for AI applications. Monitor the performance of these AI ventures for potential growth indicators.
- Hardware manufacturers adapting by self-mining may influence supply dynamics. Keep an eye on changes in mining equipment sales and their potential impact on the market.
The market is currently at a pivotal point where traditional Bitcoin mining economics are being redefined by the rise of AI. I predict that we'll see a bifurcation in the mining sector, with some smaller players unable to adapt and being forced to exit, while larger, more agile firms will thrive by integrating AI compute into their operations. The profitability of Bitcoin mining alone may no longer be sufficient for many, prompting a search for alternative revenue streams. As more mining firms begin offering compute power to tech giants like Amazon and Microsoft, the industry will become increasingly intertwined with the AI sector. This could lead to new investment opportunities and strategies that factor in both crypto and AI market dynamics.
- Track hashprice and Bitcoin price correlation closely; a sustained divergence might signal increased risk for mining stocks.
- Monitor the financial reports of publicly traded mining companies for revenue diversification into AI computing services.
- Consider investing in mining companies that have successfully secured long-term AI compute contracts, as they may represent a more stable investment.
- Assess your risk tolerance for investments in smaller mining operations, which may be more susceptible to market volatility and hashprice fluctuations.
⛏️ Hashprice: Represents the expected daily revenue a miner can earn per unit of computing power (typically measured in Petahashes per second, PH/s) contributed to the Bitcoin network.
— Charles Darwin
Crypto Market Pulse
November 8, 2025, 16:10 UTC
Data from CoinGecko
This post builds upon insights from the original news article, offering additional context and analysis. For more details, you can access the original article here.
