AI Pays Better Than Bitcoin: US Miners Turn Mining Sites Into Data Centers

Bitcoin trades at about half of last year’s peak

Lower rewards and higher difficulty squeeze mining margins

Riot signs $9.1 billion deal with AI company

“The same amount of power creates far greater value”

U.S. Bitcoin miners are rapidly shifting toward artificial intelligence and high-performance computing data centers as falling Bitcoin prices and intensifying competition erode mining profitability, even as demand from AI companies for data centers and power surges.

Bitcoin has recently traded around $63,000 to $65,000, about half of last year’s peak near $125,000. That means miners generate less revenue even when they produce the same amount of Bitcoin.

Lower mining rewards are adding to the pressure. Since the halving in April 2024, the reward for mining a block has been cut to 3.125 Bitcoin from 6.25 Bitcoin. At the same time, network mining difficulty, which reflects computational competition among miners, remains elevated at about 127 trillion. Miners are using more computing power and electricity while receiving less Bitcoin in return.

Hashprice, a measure of daily revenue per unit of computing power, has recently remained in the $30 range per petahash per second, or PH/s. That makes it difficult for operators using older machines in regions with high electricity costs to break even. CoinShares estimates that some miners running aging equipment are losing money where power prices exceed 6 cents per kilowatt-hour.

With profitability deteriorating in their core business, miners are increasingly reinventing themselves as AI infrastructure providers. Riot Platforms is one of the clearest examples. On Aug. 10, the company signed a 20-year agreement to lease 191 megawatts of data center capacity at its Rockdale, Texas, facility to an AI company. The contract is worth about $9.1 billion. If all extension options are exercised, the total value could rise to $16.1 billion.

Riot did not disclose the counterparty, though foreign media reports identified it as Anthropic, the developer of the generative AI model Claude. Riot shares surged more than 25% in after-hours trading following news of the deal.

Riot had previously signed a data center lease agreement with chipmaker Advanced Micro Devices Inc. Including the latest contract, its total AI and HPC lease capacity stands at 241 megawatts, with long-term contracted revenue of about $9.8 billion. The strategy is aimed at securing stable cash flow through long-term leases instead of relying on a mining business that swings with Bitcoin prices.

Bitdeer is also expanding its AI business. Its second-quarter AI cloud revenue increased about tenfold from a year earlier. In Norway, it signed an AI data center contract that could generate about $4.7 billion in revenue over 16 years. The company is also converting some U.S. mining facilities for AI use.

Some companies are leaving mining altogether. Kyl Infrastructure, formerly Bitfarms, has halted all operations at its U.S. Bitcoin mining facilities and will convert those sites into AI and HPC data centers.

From April through Aug. 7, Kyl sold 1,085 Bitcoin for about $75 million to secure funding for AI data center development. The company’s second-quarter revenue fell 50% from a year earlier, and it posted a net loss of $141 million.

“HPC creates much greater value from the same amount of power, and that value can remain predictable for years,” Chief Executive Officer Ben Gagnon said. “That is why it is difficult to invest further in Bitcoin mining.”

As of mid-July, Bitcoin miners had signed 19 data center agreements with AI and cloud companies worth more than $135 billion in total, according to Bernstein. S&P Global projects AI and HPC will account for about 70% of total revenue this year at companies including IREN Ltd., Core Scientific Inc. and TeraWulf Inc.

The industry increasingly views Bitcoin mining as a power infrastructure business. AI companies that need large amounts of electricity typically spend years securing new sites and winning transmission and grid approvals. Miners, by contrast, already have sites, large-scale power connections and cooling systems in place, allowing them to begin operating data centers as soon as servers are installed.

“It takes about 50 months to secure 1 gigawatt of new power capacity in the U.S.,” Bernstein Research wrote. “Bitcoin miners that already control large grid-connected sites are positioned to hold an advantage in the AI data center market.”