U.S. Bitcoin Miners Transitioning to Artificial Intelligence

In June of 2024, I found myself standing near a large industrial compound a few miles outside Corsicana, Texas. With heavy machinery in motion, yellow excavators were noticeable as they reshaped the ground, while trucks continuously moved about. This site, owned by Riot Platforms, was under bustling construction.

Eighteen months on, the plan is for two-thirds of this massive site to cater to AI and advanced computing tasks. The facility is set to morph from a bitcoin hub into a cutting-edge AI manufacturing complex.

Across the United States, similar changes are taking place at bitcoin mining sites run by diverse companies. Over the past year and a half, eight publicly traded mining firms have announced partial or full transitions towards AI.

This shift is driven by the surging need from AI firms for robust data centers that can handle the hefty demands of training AI models. Paradoxically, bitcoin miners, who laid the groundwork for the AI wave by investing heavily in data center infrastructure, are now reinventing their primary operations.

The Convergence of Pressures

Bitcoin miners engage in competitive problem-solving for the rights to process transactions and earn rewards. Their profitability is influenced by bitcoin’s market price, computational input, and costs tied to power consumption of specialized mining hardware.

In recent times, with technological advancements, competition has intensified, necessitating more computational power to secure bitcoin rewards. Additionally, the reward amount was halved in 2024, now yielding 3.125 bitcoins. Adding to this, bitcoin’s price dropped to around $85,000, a 30% fall from its 2025 peak, creating a challenging situation for all but the most efficient mining operations.

“Currently, the economic conditions are unfavorable,” notes Charles Chong, a strategic leader at BlockSpaceForce, a crypto consulting company. “There’s uncertainty about recovering investments in today’s mining machinery.”

By mid-November, according to CoinShares, a crypto investment firm, only a small fraction of the largest mining companies could remain profitable with bitcoin's current price.

Conversely, the AI sector offers better profit margins and stable income through long-term agreements with major tech companies. Bitcoin mines have disclosed more than $43 billion worth of AI and HPC deals recently.

“Though bitcoin mining still provides returns,” says Ben Gagnon, CEO of Bitfarms, which aims to fully pivot to AI and HPC by 2027, “HPC yields substantially more value per energy unit and is consistent over time, which makes it a more compelling investment.”

The Unyielding Bitcoin Pursuit

Despite the trend, some companies remain devoted solely to bitcoin mining, like American Bitcoin, launched by Eric Trump. Beginning operations in March, it was initially a part of Hut 8, now operating in AI and HPC, while still maintaining a stake.

American Bitcoin, lacking its own facilities, relies on specialized mining hardware to produce a bitcoin for an estimated average cost of $50,000 per unit due to its beneficial power rates and lower operational expenses.

Fred Thiel, MARA’s CEO during its time as a pure bitcoin miner, doubted the ease with which miners could switch to AI hosting. He explained that bitcoin mining centers are among the simplest data centers, whereas AI enterprises demand near-perfect uptime, a challenging feat for traditional bitcoin setups.

Yet, several former pure-play mining companies secured multibillion-dollar hosting contracts despite potential difficulties, suggesting confidence from firms like Google and Microsoft.

By November, MARA had initiated AI-focused operations within one of its sites, although it declined to engage in further commentary.

Experts predict pressure on firms such as American Bitcoin to follow suit in transitioning towards AI to enhance shareholder value. Still, Matt Prusak, American Bitcoin’s president, asserts their commitment to the core business of bitcoin mining.

Future of Bitcoin Mining

While beneficial to stockholders in the interim, the shift of miners to AI might jeopardize the bitcoin network's long-term integrity, as analysts warn.

A notable decrease in mining might lead to a 51% attack risk, whereby control over the network is seized by majority computational power, though currently, this remains cost-prohibitive.

Analysts foresee mining relocating to areas with abundant, cheap energy. For instance, MARA plans a facility in Paraguay due to reduced competition from energy-hungry AI operations in the U.S.

It’s also speculated that nations, including China and Russia, might adopt bitcoin mining as a strategic asset, possibly operating at a loss for national security measures.