Bitcoin price recovery unlikely to lure AI-focused miners back, CoinShares says

CoinShares expects that the exodus of publicly traded bitcoin miners to the artificial intelligence infrastructure sector will likely continue even if bitcoin prices recover.

"A BTC recovery is unlikely to reverse the AI transition," CoinShares said in its Q2 bitcoin mining report published Tuesday.

The report's author, Luke Nolan, pointed to examples of why this transition would be difficult to reverse. Core Scientific paid nearly $42 million to cancel an agreement for 15 EH/s of next-gen mining hardware, while several other operators have committed sites to AI and high-performance computing leases lasting upwards of 15 years. 

At least 35 EH/s of computing power is already scheduled to leave the publicly listed group of miners, equivalent to roughly 4.7% of Bitcoin's current 750 EH/s network hashrate.

Keel, formerly Bitfarms, stopped mining entirely in June, while IREN plans to complete its exit by the end of 2026 and Cipher Digital is likely to leave the mining sector by the end of 2027. TeraWulf is also winding down its remaining 145 MW of mining power.

AI vs. BTC

A quick look at the bleak AI versus bitcoin mining economics is enough to explain the shift. CoinShares estimates AI currently generates profits of roughly $1.5 million per megawatt for these companies, compared with about $500,000 per megawatt from bitcoin mining. 

A sustained rise in the bitcoin price could improve those numbers and may even encourage companies to deploy some additional mining capacity. Still, CoinShares expects that type of investment to be made among miners like Riot, MARA, HIVE and Bitdeer, which have kept their models open to flexibility.

The average cash cost to produce a bitcoin reached roughly $75,500 in the second quarter, while bitcoin ended Q2 at just $58,400. The monthly average hash price, the revenue miners earn from a single unit of compute power, fell to an all-time low of $27.70 per PH/s per day in June.

Conditions have improved slightly since then, with bitcoin's recovery to around $77,000 lifting hash price to around $38 per PH/s per day and pushing most operators back above cash breakeven. 

Still, CoinShares expects that the miners who have already committed their power and infrastructure to AI will stay the course and won't be coming back.