The challenges of block reward mining are pushing most BTC miners into the arms of artificial intelligence (AI), while others get pushed into bankruptcy court.
The BTC network’s most recent difficulty adjustment on July 25 was a modest 0.74% decline, a significantly smaller benefit than had been forecast earlier this month. And without hope that the BTC token’s price might resume its upward trajectory for any sustained period, more miners are switching off their ASIC rigs and ‘pivoting’ to operating data centers for AI operators.
The impact of this wholesale miner ‘capitulation’ is putting BTC on track to suffer its first annual difficulty decline since the network launched in 2009. And with the next ‘halving’ event less than two years away, some analysts are understandably concerned regarding the future security of the network.
But there’s zero future for Poolin Technology, the Singapore-based mining pool that was once among the sector’s top performers but filed for Chapter 11 bankruptcy protection last week.
Poolin and two of its U.S. offshoots filed their petition in a New Jersey court, citing assets between $1 million and $10 million and liabilities between $100 million and $500 million. Poolin estimated its number of creditors at between 10,001 and 25,000.
Poolin’s troubles began in 2022 as BTC’s price crashed amid that year’s wave of crypto bankruptcies and the ‘crypto winter’ that followed. That September, Poolin froze withdrawals by its Poolin Wallet and Pool Account users, citing “some liquidity issues.” Said issues were caused by dramatic declines in the crypto collateral backing the loans Poolin had taken out in better times.
With no way to honor withdrawals, Poolin issued IOUs that were never honored, and the ~11,700 impacted users are owed nearly $164 million, representing Poolin’s largest single debt obligation.
Poolin is now looking to unload its two West Texas mining sites, which, until they shut down earlier this month, were operated by Poolin’s Lonestar Dream affiliate. Poolin has designated a ‘stalking horse’ bidder, Thor CALAP LLC, to ensure the sale of the two properties and their gear brings in a minimum of $52 million. The properties could be sold either together or individually.
Poolin’s longstanding financial challenges prevented it from making its own AI pivot. There are a few ‘pure play’ miners still functioning, including the Trump-linked American Bitcoin Corp (NASDAQ: ABTC), but most have been lured away by the more predictable revenue streams offered by AI data center clients.
MARA (NASDAQ: MARA) was once the leading miner in terms of hashrate, but that crown was stolen by rival Bitdeer (NASDAQ: BTDR), although MARA might argue that it willingly abandoned that throne as part of its AI push.
MARA CEO Fred Thiel recently stated that, while AI data centers cost significantly more to set up than mining sites, data centers generate significantly greater revenue per megawatt of power consumed. Plus, banks are more likely to offer loans to data center developers because deep-pocketed AI tenants like Google (NASDAQ: GOOGL) are paying the bills, whereas BTC is no longer anyone’s idea of a safe bet.
Core mines a headache for Jack Dorsey
MARA will release its Q2 figures on August 6, and analysts expect the company’s recent losses to continue as BTC’s price closed out the quarter near its year-to-date low of ~$58,500.
Next week will see a flood of other publicly traded miners’ Q2 reports, including ABTC, Cipher Digital (formerly Cipher Mining [NASDAQ: CIFR]), Riot Platforms (NASDAQ: RIOT), and TeraWulf (NASDAQ: WULF). Apart from ABTC, all of the above long since embarked down the road marked ‘pivot.’
This week, Core Scientific (NASDAQ: CORZ) reported a net loss of $1.15 billion in the three months ending June 30, bringing its H126 losses to over $1.5 billion. Of the company’s total $164.2 million in Q2 revenue, only $26.5 million (16%) came from BTC mining (both self-mined and third-party hosted).
Q2’s costs of mining were $11 million greater than mining revenue, offering a strong rationale behind Core’s previously announced decision to “continue winding down” its mining operations. Core expects “only one or two” of its sites will still be mining in 2027, while its hosted mining operations “are expected to conclude” by the end of 2026.
Self-mining accounted for 18% of Core’s H1 revenue, down from 82% in the same period last year. But ‘colocation,’ aka data center revenue’s share, rose from 12% to 77% over the same span. And Core just announced a major new AI partnership with chipmaker Advanced Micro Devices (NASDAQ: AMD) to supply between 500MW and 2.5GW of U.S. data center capacity.
As further evidence of its mining disinterest, Core’s Q2 showed a nearly $42 million loss from a “contract termination.” This “termination and settlement agreement” was with Jack Dorsey’s Block Inc (NASDAQ: XYZ), whose Proto Global mining hardware division had a deal to supply Core with new ASICs.
It wasn’t that long ago (March, to be specific) that Core CEO Adam Sullivan was praising the Proto rigs for helping Core “maintain productivity across our mining portfolio.” But Core subsequently decided it was better to pay a $42 million penalty than to saddle itself with ASICs it no longer wants or needs.
What this means for Proto Global’s future is unclear. Core was Proto’s first major customer, and in fact the only major mining customer Block ever publicly name-checked. Block has yet to issue its Q2 report, but its Q1 report offered precisely zero data on how Proto was faring financially. Dorsey previously claimed that Block was “gonna have some really happy [mining] customers and we’re going to grow the market and take a lot of market share.” (They say life is what happens when you’re making other plans.)
Ionic switching off Celsius mining rigs
On July 28, Ionic Digital (NASDAQ: IOND) made its Nasdaq debut, promoting itself as “a digital infrastructure company supporting the expanding needs of AI and high-performance computing.” Ionic was born as a vehicle for assuming control of the mining assets that formerly belonged to the Celsius Network, the Alex Mashinsky-led Ponzi scheme that collapsed under the weight of its own fraud in 2022.
Ionic’s debut got a warm welcome from investors, its share price rising by more than one-third in its first two days of trading. One week prior, Ionic offered its expectations for the company’s Q2 performance, which projected a net loss of $35 million, so the investor enthusiasm might seem a tad unwarranted.
That is, until you read the fine print, in which Ionic celebrated its transition from a ‘pure play’ mining operator to a company that has “successfully demonstrated our ability to convert and optimize our infrastructure,” including efforts to “better monetize sites currently mining bitcoin.”
Ionic reported total revenue of $51.4 million in Q1, with mining accounting for just $7.4 million. Compare that to Q125, when mining accounted for every penny of that quarter’s $41 million revenue. Meanwhile, ‘digital infrastructure leasing’ revenue hit $44 million in Q126, already bringing in more than mining did in the same period last year.
Ionic said that of the ~120,600 ASIC mining rigs it owned at the end of Q1, it plans to retain 28,100 for active mining, along with another 19,100 it’s keeping “for spare parts.” The other 73,400 rigs will be “sold or scrapped” before the year is through. Despite this purge, Ionic claims it has “not established a timetable for, or committed to, the cessation of bitcoin mining operations.”
Ionic held 2,815 BTC tokens in its ‘treasury’ at the end of Q1, and the company says these tokens will be “managed and deployed in support of our broader growth strategy.” Ionic no longer views these tokens as “a long-term balance sheet holding to be indefinitely accumulated.”
Kazakhstan offers miners cheap energy in exchange for 10% of mining profits
In 2024, then-candidate Donald Trump declared that if he were elected president, he’d make America the ‘mining capital of the world.’ Two years later, America’s share of global mining hashrate stands close to 37%, well ahead of runner-up Russia (17.2%) and China (12.2%).
Kazakhstan was once a top-three market but slipped out of the top-10 in Hashrate Index’s Q3 2026 mining chart. Regardless, Kazakhstan is lousy with fossil fuels, making it both a net energy exporter as well as a desirable jurisdiction for miners seeking cheap power—their single biggest cost item—and an understanding government.
Kazakhstan has welcomed mining operators, including the government-accredited BTCpool.kz mining pool, launched in 2023 by Enegix Global (which just launched a similarly state-blessed pool in Oman).
But Kazakhstan also has plans for a state-run BTC ‘reserve’ into which locally licensed miners are being asked to contribute. Under a statute approved on July 18, Kazakhstan will implement a policy of “strategic digital mining,” under which miners can apply to be granted 10-year capped “quotas for electricity” from approved energy producers (currently just the coal-fired Ekibastuz GRES-1 power station). All the government wants in exchange is the “mandatory transfer” of 10% of miners’ profits.
‘Profits’ will be the value of the BTC remaining after deduction of miners’ expenses related to electricity consumption (including value-added tax) and the costs to transmit electricity from local grids to miners. The government’s share of these profits will be transferred to the Astana Hub Autonomous Cluster Fund, which will forward them to the National Bank of Kazakhstan’s investment arm, which will ‘invest’ the tokens in the National Strategic Crypto Reserve.
Miners looking to participate in this program must operate a site boasting a capacity of at least 150MW, mining rigs capable of handling at least 150 terahashes per second (TH/s), a suitably robust connection to the grid, deals with telecom operators, and certain other requirements.
Participating miners will have to designate a specific digital wallet into which the state’s 10% cut will be deposited, and this wallet will be subject to annual independent audits.
It’s not easy mining green
Regardless of the network, block reward mining has long been criticized for its massive energy demands. That goes double for BTC, which abandoned the original Bitcoin vision of peer-to-peer electronic cash transactions in favor of producing ‘digital gold’ that’s hoarded rather than used.
The Cambridge Centre for Alternative Finance (CCAF) has issued reports tracking BTC’s total energy consumption and what comprises its energy mix. The report issued last year, which tracked activity through June 2024, found that sustainable energy sources accounted for just over half (52.4%) of this energy mix, with the rest coming from fossil fuels.
The Energy Mag (formerly The Mining Mag) recently reported on a presentation given by the CCAF’s climate impact lead, Alexander Neumueller, based on preliminary CCAF data tracking BTC mining’s activities through December 2025. Neumueller said BTC mining is now consuming ~190 terawatt-hours (TWh) of electricity annually, up from 138 TWh in June 2024.
However, annual emissions from mining activity totaled ~48 million metric tons of carbon dioxide, a 20% rise from the 40 million tons reported in June 2024. That’s a much smaller percentage rise than the 37.7% increase in electricity consumed during the same period.
Neumueller explained the divergence in figures by noting that sustainable energy’s share of miners’ overall energy mix has risen by 7 percentage points from the previous report to 59.4%. Hydropower, which accounted for 23.6% in June 2024, is now miners’ primary energy source, surpassing natural gas, which claimed a 38.2% slice in June 2024.
Neumueller said the shift to hydro is partially due to miners relocating operations to hydro-abundant markets like Ethiopia. While this transition hasn’t always been smooth—Ethiopia halted new mining power permits a year ago due to excessive grid demands—it underscores the lengths to which miners are prepared to go to make their operations more cost-effective.
At least, until they abandon those mining operations entirely in pursuit of that sweet AI money.
Watch | Inside Bitcoin Mining Disrupt: Why Traditional Mining Is Losing Profit
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