Bitcoin Miners Shift to AI and HPC Infrastructure Amid Declining Profitability

Bitcoin mining firms are halting operations and shifting toward artificial intelligence (AI) and high-performance computing (HPC) infrastructure as mining profitability declines. The trend reflects a shift in valuation metrics from hash rate to power usage and data center utilization.

According to blockchain media CryptoPolitan, some listed Bitcoin miners have effectively ceased mining operations, with certain companies terminating next-generation mining equipment contracts despite penalties to pivot toward AI/HPC ventures. Keel, formerly known as BitFarms, halted all operations at Fanse Creek, Scrubgrass, and Sharon mines on June 29, having previously shut down the Mojis Lake facility in April.

CoinShares' Q3 2026 mining report forecasts Keel will generate no mining revenue in Q3. The company recorded a quarterly gross profit margin of -285% due to early equipment depreciation and sold approximately 1,085 BTC at an average price of $69,100 for around $75 million, with plans to liquidate remaining 1,861 BTC by year-end.

Core Scientific is also absorbing costs from reducing mining operations, paying $41.9 million to terminate a 15 exahashes per second (EH/s) contract for next-generation chips. The company's mining segment gross profit declined 56%, with management stating remaining equipment will be operated only to fulfill power contracts while transitioning facilities to other uses.

Cipher Digital has informed investors it will not invest further in mining infrastructure, planning to exit the business by end-2027. HyperScale Data has already begun converting mining sites to AI infrastructure, securing a $1.2 billion 20MW contract with a California-based Neocloud company that could expand to $3 billion with additional options.

Bitcoin network hash rate has declined from 1,066 EH/s in Q1 to 940 EH/s in Q3, a 6.3% drop from Q2 and approximately 12% below December 2025's peak. Mining profitability deterioration is cited as the primary driver, with CoinShares reporting weighted average cash costs of $75,500 per BTC mined in Q2 2026 versus a closing price of $58,400.

Meanwhile, AI/HPC infrastructure demand has surged, with industry contracts exceeding $70 billion. IREN secured a $9.7 billion deal with Microsoft, while TeraWulf signed a $19 billion agreement with Anthropic. Core Scientific reportedly secured over $14 billion in expected contract revenue through its transition.

Industry analysts view this as structural rather than cyclical change. Locus COO Ethan Vera described the shift as 'not a temporary dip but structural change,' noting miners are now being revalued as energy and AI infrastructure asset holders. Peter Schiff cautioned that AI may not necessarily be bullish for Bitcoin, given competition for capital, power, and data center space.

Once converted to AI/HPC use, data centers face challenges reverting to mining operations due to multi-megawatt power infrastructure modifications. CoinShares reports 225 restrictions on data center development across 30 U.S. states, with 151 still active as of now.

Not all miners are exiting entirely; Bitdeer continues dual operations, maintaining mining alongside AI/HPC contracts. Companies securing AI/HPC deals trade at average forward revenue multiples of 12.9x versus 3.7x for others, highlighting the market's preference for infrastructure-focused miners.