Block reward miners are on the hunt for more profitable tokens to mine than BTC, while Sweden’s taxman is demanding money, money, money from miners it accuses of dressing in sheep’s clothing and/or data center clothing.
The BTC token’s fiat price rally appears to have stalled after surging to over $82,000 last week, falling back below $77,000 on Thursday. Regardless, as this is being written, the average all-in cost of producing a single BTC was nearly $5,000 below its fiat value. So gather ye rosebuds while ye may.
The BTC network’s mining difficulty rate rose 1.3% on September 5 to an average of 127.5 trillion hashes (guesses) required to ‘find’ a block on the network and claim the 3.125 BTC reward. Current forecasts are for an additional 2.4% rise in the difficulty rate at the network’s next adjustment on September 19.
These difficulty figures are still well below the average over the past 12 months and, in part, reflect the traditional ‘summer switch-off’ of ASIC mining rigs in U.S. states like Texas. Many miners in southern states have deals with local utilities to temporarily reduce their activity (for a cash subsidy) when the temperature rises so residents can run their air conditioners without pushing electrical grids past their breaking point.
But the difficulty rate has also benefited from the flood of mining operators willingly mothballing their ASICs in favor of GPUs capable of processing data for artificial intelligence (AI) and other high-performance computing (HPC) clients.
The Energy Mag (formerly The Miner Mag) released data this week showing the extent to which some of the largest publicly traded miners have seen their realized hashrate decline as they ‘pivot’ to serving as AI/HPC data centers.
At the far end of the negative spectrum, Cango (NYSE: CANG) saw its realized hashrate fall by 29.5 exahashes per second (EH/s) in the first six months of 2026. The runner-up in this hashrate decline was IREN (NASDAQ: IREN), which lost 21.9 EH/s in H126. Combined, those two companies represent 68% of the total hashrate decline among the 13 miners in the data table.
While IREN’s decline reflects the company’s stated objective of being done with mining by year’s end, Cango still claims it is only ‘actively right-sizing’ its mining operations while its AI/HPC expansion efforts continue.
Other companies posting significant hash rate declines include Keel Infrastructure (NASDAQ: KEEL), which is similarly targeting the imminent cessation of nearly all mining, and Cipher Digital (NASDAQ: CIFR), which continues to mine but doesn’t “anticipate additional capital investment” in mining going forward.
At the other end of this spectrum is Bitdeer (NASDAQ: BTDR), which saw its hashrate grow by 19.4 EH/s. While Bitdeer has its own AI/HPC efforts underway, it’s also building an ASIC manufacturing hub in Nevada that will start producing 10,000 new rigs per month by year’s end. Most of this output will reportedly be used in-house to further Bitdeer’s pursuit of mining where others fear to tread.
Also, in positive hashrate growth mode is MARA (NASDAQ: MARA), Bitdeer’s chief rival for the current hashrate crown. MARA’s hashrate improved by 4.2 EH/s in H1, but the company has suggested its mining ops are now primarily for cash flow to fund additional AI/HPC expansion.
Zcash iz zee bomb
As for why public miners’ AI/HPC pivots have been so dramatic, The Energy Mag offered a comparison of revenue density across compute workloads. On a revenue per megawatt hour (MWh) basis, AI Cloud was Q2’s clear winner with nearly $941, compared to just $179/MWh for a state-of-the-art Bitmain S23 Pro ASIC. An older S21 Pro ASIC fares even worse, delivering just $113.45/MWh.
Interestingly, the recent surge in the fiat price of the privacy-focused ZCash (ZEC) token made Bitmain’s Z15 Pro rig a strong second-place finisher at $585.61/MWh as of June 30. By August, The Energy Mag reported that the Z15 Pro’s returns had soared to $727.30/MWh, thanks in part to ZEC’s price surge to a then-record high of $890.
ZEC is currently trading at ~$1,100 after coming close to $1,300 earlier this week. The surge has, for the time being, elevated the token into the rarefied air of the top-10 digital assets by market cap.
ZEC’s surge is the product of several factors, including the recent conversion of Grayscale Investment’s Zcash Trust into an exchange-traded fund (ETF).
There’s also the Winklevoss twins behind the Gemini (NASDAQ: GEMI) digital asset platform converting a bitotech firm into a Zcash-focused digital asset treasury called Cypherpunk Technologies Inc (NASDAQ: CYPH). Cypherpunk currently holds nearly 2% of the total ZEC token supply and aims to ultimately increase that to 5%.
In August, Cypherpunk announced an additional $33.3 million ‘equity-based transaction’ from the Winklevii with the aim of building “the largest Zcash mining fleet in the world.” The fleet claims an ~18% share of the Zcash mining network’s hashrate (known as ‘solrate’).
Cypherpunk’s primary Zcash mining rivals include Foundry USA, which in March announced its intentions to launch an “institutional-grade Zcash mining pool.” Within a month, Foundry had achieved a mining share close to 30%.
There’s also Fortitude Mining Holdings, a subsidiary of Digital Currency Group (DCG), which recently acquired a 12.5MW facility in Nebraska to expand its Zcash mining footprint. In June, Fortitude announced its intention to go public later this year via a ‘business combination’ with AI-powered medical tech firm HeartSciences (NASDAQ: HSCS).
Predictably, more competition is dividing this pie into smaller slices. As fast as ZEC’s price is rising, the network’s solrate is growing at an even faster clip. Check back here in a year or so, when we’re writing weekly articles about Zcash miners ‘pivoting’ elsewhere in pursuit of better returns.
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Canaan finds no land of milk & honey in Q2 results
Canaan Inc. (NASDAQ: CAN) is still mining BTC, although the returns from doing so continue to shrink. Mining revenue totaled just under $17.7 million in the three months ending June 30, down from $19.1 million in Q1 and from $28.1 million in Q225.
Canaan’s ‘products’ revenue (ASIC design, manufacture, and sales) fared even worse, as pivoting miners saw no need to buy new rigs. Product sales totaled $13.6 million in Q2, down from $42.9 million in Q1 and $71.9 million in the same period last year. Overall revenue of $31.9 million was about half of Q1’s figure and more than two-thirds below Q225’s total.
Worse, impairment charges on aging/unsold ASICs added $9.2 million to Q2’s expenses, resulting in an operating loss of $69.5 million. Throw in a $9.3 million charge for the falling value of the digital assets in Canaan’s ‘treasury,’ and the Q2 net loss soared to $97.6 million.
Looking ahead to Q3, Canaan expects total revenue of just $11 million to $15 million. On the analyst call, CEO Nangeng Zhang was asked whether global demand for ASICs might make up for falling demand from U.S. operators. Zhang said the international demand is “also very, very weak at the moment.” Zhang blamed both “weaker mining economics” and “geopolitical conditions” for putting a damper on Canaan customers’ “willingness and ability to invest.”
In another sign of trying times, Canaan used its Q2 results to announce that it had sold 54 BTC and 3,952 ETH (the Ethereum network’s native token) in late August for a total of $13.9 million. Canaan used $5.4 million of this sum to repurchase its own shares, and bought back an additional $7.4 million worth of its stock so far in September.
The buybacks were part of the share repurchase program that Canaan announced last December to regain compliance with Nasdaq rules requiring a minimum $1 share price. Canaan’s shares haven’t sat above $1 since last November, leading Zhang and CFO Jin Cheng to use their own funds to repurchase nearly 1.5 million Canaan shares in March.
But all these efforts have done little to elevate Canaan’s share price. The stock closed Thursday at $0.31, down another 2.4% on the day. The company has twice applied to Nasdaq for 180-day extensions to regain compliance and now has until January 11, 2027, to get back in Nasdaq’s good books.
Last month’s token sales included the total selloff of Canaan’s ETH treasury. Canaan has yet to release its August BTC production figures, but the company’s BTC treasury had 1,917 tokens at the end of July. Given the company’s Q3 revenue forecast and its lethargic share price, it’s safe to assume additional BTC sales are in the forecast.
Canaan has set a goal of securing a power resource pipeline of one gigawatt by year’s end. Zhang said on the call that it was “still too early to decide” whether AI/HPC clients might join Canaan’s mining operations in drawing from this power.
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It never rains but it pörrs
Last month, Hive Digital (TSXV: HIVE) discussed the $84.6 million non-cash provision on its books, a legacy of their ongoing fight with Sweden’s taxman over “contested VAT [value-added tax] assessments” involving Hive’s Swedish subsidiaries. Hive execs insist they will continue to fight these assessments and don’t plan to pay up, merely noting the sum on their balance sheet as a formality.
On September 4, Swedish media quoted Patrik Lillqvist, the Swedish Tax Agency’s head of intelligence, saying his office had sent tax bills of SEK540 million (US$55.8 million) to six companies accused of attempting to minimize their tax obligations by pretending to engage in AI/HPC data center operations while secretly mining cryptocurrencies.
Sweden offers tax breaks for importing hardware for use in AI/HPC data centers, which are deemed to have greater societal benefit than mining, given mining’s reputation for consuming vast amounts of electricity to produce function-free ‘digital gold’ tokens that benefit only the recipients.
You’ll recall that Northern Data AG, a miner-turned-data center operator that was acquired by USDT stablecoin issuer Tether before being carved up and rebranded, was the subject of probes by both Swedish and German authorities for allegedly evading tax bills by misconstruing the intended purpose of some 10,000 Nvidia (NASDAQ: NVDA) chips.
Many of the targeted companies have appealed the taxman’s decisions, but Swedish courts have so far sided with the authorities. Hive’s Swedish offshoot, Bikupa Datacenter AB, has been forced into administration/restructuring after failing to pay its SEK 477 million VAT bill.
The municipality of Boden has arranged to sell the property in which Bikupa’s gear was housed for SEK 105 million. However, the buyer is another Hive offshoot, the AI-focused Buzz HPC. Without a shred of irony, a municipal official claimed the future Buzz-run AI property represents “a big investment that will benefit our municipality in the long term.”
Abandon all hope, ye who mine here.
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Watch | Inside Bitcoin Mining Disrupt: Why Traditional Mining is Losing Profit
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