Bitcoin Mining Struggles Amidst AI Resource Competition
The Bitcoin mining landscape is experiencing notable shifts as artificial intelligence and high-performance computing rise as strong contenders for data center resources. As highlighted in a report, the escalating expenses and declining profitability in Bitcoin mining are prompting numerous operations to shift their focus towards AI and HPC initiatives. In the second quarter of 2025, publicly listed miners faced an average cash cost of around $74,600 to produce a single Bitcoin, while total costs, factoring in depreciation, climbed to approximately $137,800. The financial strain is further exacerbated by transaction fees plummeting to historic lows, now accounting for less than 1% of total block rewards in recent months. As a result, miners are looking into diversifying into AI and HPC to mitigate these challenges.
Bitcoin mining facilities, originally built for cryptocurrency activities, are now being transformed to support AI workloads. These facilities, featuring data-center-grade infrastructure, are ideally positioned for AI applications that demand elevated power density and reliability. Nonetheless, the shift towards AI presents its own set of hurdles. Establishing AI infrastructure can incur costs that are substantially higher than those associated with conventional mining operations, potentially soaring to $20 million per megawatt, in stark contrast to the $700,000 to $1 million range typical for Bitcoin mining.
In August 2025, the Bitcoin network achieved a significant milestone by surpassing the 1 Zettahash/s mark, highlighting the continuous competition for more efficient hardware solutions. In the face of rising hashrate, the hash price—critical for miner earnings—has persistently dropped, averaging approximately $50 per PH/s/day in Q2 2025. The drop in profitability is driving miners to explore new strategies, such as AI and HPC diversification, to maintain their operations.
In a forward-looking statement, sources anticipates that the network hashrate may hit 1.5 Zettahash/s by the middle of 2026, which could further squeeze mining margins unless there is a significant rise in Bitcoin prices. The report indicates that only those operators who have access to low-cost power and cutting-edge hardware will continue to see profitability. The valuation gap between AI-focused and traditional Bitcoin miners is anticipated to expand as the industry progresses.
