For those engaged in block reward mining on the BTC network, the economics of their profession can seem like one step forward, two steps back, then a rollercoaster plunge into the abyss.
Long-suffering BTC miners thought they were finally in for a break last month as the sector’s economics appeared to be improving. But the month ended on a sour note as the network difficulty rate rose again to just under 139 trillion hashes (guesses) required on average to ‘find’ a block and claim the 3.125 BTC block subsidy.
That trend appears to be in for a major reversal, as the next difficulty adjustment scheduled for June 14 is forecast to decline to 123.7 trillion, a nearly 11% reduction from the current rate. Trouble is, the even bigger plunge in BTC’s fiat price over the past two weeks has left the average all-in cost to produce a single BTC at ~$85,000, while BTC is currently trading at ~$62,000.
That disparity makes mining unprofitable for any operator lacking (a) the absolute newest/most efficient ASIC mining rigs, and (b) easy access to cheap energy. Those not in possession of these attributes will continue to scale back their less efficient operations or shut down entirely, further concentrating the BTC network’s security in a dwindling number of hands.
Mining’s dodgy economics are also accelerating the ‘pivot to AI’ that nearly every miner (save a few diehard ‘pure play’ operators) has embarked upon over the past couple of years. Simply put, on a revenue-per-megawatt-hour basis, serving the needs of AI and other high-performance computing (HPC) operators offers a greater (and more predictable) profit margin.
A quick glance at recent announcements from miners-turned-AI/HPC-contractors shows serious debt-raising efforts, all of which are intended to help fund data center buildouts to snag additional AI/HPC opportunities.
In just the past 10 days, Hut 8 (NASDAQ: HUT) closed a $4.35 billion offering of senior secured notes, IREN (NASDAQ: IREN) closed a $3.65 billion GPU financing facility, Cipher Digital (NASDAQ: CIFR) priced an $810 million offering, and Keel Infrastructure (NASDAQ: KEEL) (formerly Bitfarms) closed a $458 million offering.
For the time being, some miners are exploiting the shrinking field of players to squeeze every last bit of mining revenue from their aging ASICs before they become obsolete. Others see promise in the fact that mining is an around-the-clock activity, while most AI large language models (LLM) use is focused on local business hours, opening up the possibility of serving AI/HPC needs by day and BTC by night.
But others see little purpose in holding on to these legacy operations, particularly since ASICs aren’t good for much beyond mining, just as GPUs aren’t optimal for mining. The sector is thinning rapidly, and the exodus will only accelerate as the next ‘halving’ event—which in less than two years’ time will reduce the block reward to just 1.5625 BTC—draws closer.
If we sound bitter, it’s because this was all so avoidable. Bitcoin creator Satoshi Nakamoto’s original vision was for transaction fees to supplement and eventually supplant block rewards as miners’ main reason for getting up in the morning.
But outside developers intervened, limiting BTC’s capacity to handle a meaningful number of transactions in favor of a ‘digital gold’ strategy. They claimed that BTC’s price would just rise forever, so transactions didn’t matter. So far this month, transaction fees have accounted for less than 1% of total miner revenue. Congrats on a hatchet job well done, boys.
Bitdeer loses three C-suite execs in 11 days
One of the top hybrid miners/AI’ers is Bitdeer (NASDAQ: BTDR), which dramatically ramped up its self-mining operations over the past year or so (and now rivals MARA (NASDAQ: MARA) in terms of hashrate). Bitdeer also manufactures ASICs, so when it started finding fewer buyers for these products, it became a case of ‘use it or lose it.’
On June 1, Bitdeer announced the launch of its latest ASIC, the water-cooled SEALMINER DL1 Hydro, which the company claims is “engineered to address hashrate density and energy consumption requirements for industrial-scale operations.”
Speaking of, Bitdeer also announced it had broken ground on its latest “energy and digital infrastructure facility” in the Canadian province of Alberta, where energy is cheap and abundant. The site near Fox Creek will host a data center offering around 100MW of computing capacity that is expected to be operational by Q2 2027. The site will rely on power generated by a new natural gas plant that will eliminate the need to tap into the existing power grid.
However, these positive steps might be masking a less promising reality. In a June 8 filing with the U.S. Securities and Exchange Commission (SEC), Bitdeer revealed the resignation of its chief operating officer, Chao Suo, and its chief business officer, Linghui Kong.
The resignations were described as immediate in effect, despite no replacements having been named. The two execs were said to have departed for “personal reasons,” not due to “any dispute or disagreement” with the company’s operations, policies, or practices. The announcement stated somewhat cryptically that the two former execs “will continue to serve the Company,” although in what capacities wasn’t specified.
Kong previously served as Bitdeer’s CEO before relinquishing the role to founder Jihan Wu and assuming the newly created CBO position. Suo was upgraded to the CFO position after serving as a director and running Bitdeer’s HR department.
This is the latest step in what appears to be an ongoing shuffle of Bitdeer’s executive ranks, following last month’s resignation of chief financial officer Jianchun Liu (also for ‘personal reasons’). Michael Potter was named as Bitdeer’s new CFO, while Liu was said to be staying on as a ‘principal adviser.’
Cango executing … profits
On June 10, Cango (NYSE: CANG) released its May production figures, which showed a self-mining hashrate of 23.3 EH/s. That’s up nearly three points from April’s figure, but still well below the nearly 28 EH/s Cango reported in March. The company said last month that the reduced hashrate was due to it switching off older, unprofitable ASICs while awaiting the arrival of newer models from manufacturer Bitmain.
However they were configured, Cango’s rigs produced 236.5 BTC last month, less than half the totals it was routinely producing last year, before it abandoned its ‘pure play’ mining stance and belatedly embraced the AI/HPC banner.
On June 1, Cango released its financial report card for the three months ending March 31, during which it generated revenue of $102 million, down nearly one-third from the same period last year. Mining accounted for all but $3.5 million of this sum.
Meanwhile, Cango’s costs more than doubled to $356.3 million. While this included a $151.8 million hit on the value of the BTC in its vaults, the total cost of generating revenue significantly exceeded actual revenue, and the company booked a net loss of $261 million for the quarter, a more than 9x increase in red ink year-on-year.
Regardless, CEO Paul Yu said Cango was “executing a disciplined strategy to strengthen our mining foundation while advancing into AI infrastructure” through its new EcoHash platform. Cango is advancing “pilot deployment of modular, containerized compute units which supports a phased roadmap that begins with GPU compute leasing and scales toward a global AI compute network over time.”
BitFuFu sees no evil in falling BTC price
BitFuFu (NASDAQ: FUFU) remains stubbornly mining-only, which could explain why its Q1 net loss more than doubled to $35 million. However, the company blamed much of that red ink on a fair value loss on “digital assets and digital asset receivables or payables” due largely to “downward pressure on Bitcoin prices.”
Mining revenue was down a modest 6.8% year-on-year to $72.7 million. BitFuFu’s bacon was saved by the company’s Cloud Mining Solutions hosting operations, which saw revenue rise 7% to $57.5 million while self-mining revenue slid 35% to $11.4 million.
Tellingly, revenue from mining equipment sales was ‘nil’ in Q1, whereas the first quarter of 2025 saw these sales bring in $6 million. BitFuFu said the sales void was “driven by lower customer demand amid Bitcoin price uncertainty and broader market sentiment.”
BitFuFu finished the quarter with 1,794 BTC in its treasury, a total that rose to 1,855 at the end of May. BitFuFu generated 177 BTC in May, neatly split between self-mining (90) and Cloud (87). However, the self-mining total was nearly triple April’s total, while the Cloud tally was down from 113 in April.
Company CEO Leo Lu said the diverging trajectories reflected the “strategic shift in our production mix” and “a deliberate capital allocation decision.” While BTC’s fiat price may be in freefall, BitFuFu has chosen to view the situation as “an attractive long-term accumulation opportunity, and we have proactively shifted resources toward self-mining to build our Bitcoin holdings.” BitFuFu insists that it remains “confident in Bitcoin’s long-term outlook.”
Hive mind celebrates ‘defining year’
Hive Digital (TSXV: HIVE) is a hybrid operator that reported revenue of $71.8 million in the three months ending March 31, a period that represents the final quarter of Hive’s fiscal 2026. Mining accounted for $67.2 million of that total, a 24% year-on-year decline. HPC revenue hit $4.6 million, up 54% year-on-year, thanks to the first full quarter of contributions from Hive’s new Nvidia (NASDAQ: NVDA) H200 GPU cluster.
For the fiscal year as a whole, revenue rose 158% to $297.8 million, of which HPC hosting accounted for $19.5 million, nearly doubling its FY25 total. However, Hive booked a $148.4 million loss as operating costs more than doubled and depreciation costs nearly tripled. The company nearly quadrupled its hashrate (to 25.1 EH/s) over the past year, but clearly, it came at a cost.
Hive chairman Frank Holmes tried not to appear bothered, calling FY26 “a defining year” for the company, sitting at “the intersection of two powerful technology trends: Bitcoin and AI.” Holmes said Hive’s “mandate hasn’t changed: disciplined, high-[return on invested capital] growth powered by 100% green energy.” Holmes said the dramatic changes of recent years had positioned Hive for “one of the most significant growth periods in our history.”
Mining whether you like it or not
While all the focus is on miners pivoting to AI, what happens when AI agents decide to go the other way? On June 9, Chinese state-run media reported on the National Computer Network Emergency Response Technical Team/Coordination Center of China warning of “certain malicious AI agent skills packages” hijacking HPC computing power in order to mine BTC.
Specifically, some of these packages are being marketed to end users as a means of “crypto-mining for profit.” Deploying these packages instructs AI agents to download external mining programs and redirect a portion of an LLM’s GPUs to pursue block rewards. (Since mining is illegal in China, your real ‘reward’ could involve hard labor in an actual mine. Bring your own pickaxe.)
Others skills packages are promoted as “large model jailbreaking,” allowing AI agents to bypass LLM security restrictions and convince a chatbot to answer prohibited questions. You know, like, ‘how do I build a dirty bomb’ or ‘why don’t BTC miners throw in the towel already?’
And that’s not the only threat. Microsoft Defender Experts recently issued a warning to individuals who own high-performance GPUs to be on the lookout for “a cryptojacking campaign that combines SEO poisoning, trojanized system utility installers, and remote monitoring tool abuse to hijack GPU resources for cryptocurrency mining.”
Unlike previous cryptojacking campaigns that favored volume over precision, this latest campaign “takes a more deliberate approach: its operators have built a targeting and monetization strategy engineered from the ground up to maximize GPU mining yield per compromised device.”
We encourage all GPU owners to read the entire Microsoft post to learn how to defend against this threat. We also empathize with any actual miners who just realized they’re competing not just against other miners but rogue AI agents as well. You know, if someone were to open a ‘pivot to sanity’ psychiatric practice for miners, they’d make a fortune.
In order for artificial intelligence (AI) to work right within the law and thrive in the face of growing challenges, it needs to integrate an enterprise blockchain system that ensures data input quality and ownership—allowing it to keep data safe while also guaranteeing the immutability of data. Check out CoinGeek’s coverage on this emerging tech to learn more why Enterprise blockchain will be the backbone of AI.
Watch | Inside Bitcoin Mining Disrupt: Why traditional mining is losing profit
title=”YouTube video player” frameborder=”0″ allow=”accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share” referrerpolicy=”strict-origin-when-cross-origin” allowfullscreen>
Be the first to comment