Bitcoin Mining Crisis: Profitability Plummets to Shocking Lows—Is Your Investment at Risk?

The Bitcoin mining landscape is facing significant changes as various companies adapt to market pressures and regulatory scrutiny. Here are some of the latest developments that are shaping this volatile industry.

In Malaysia, authorities have uncovered approximately 14,000 illegal Bitcoin mining sites over the past five years, resulting in cumulative losses of about $1.1 billion for the state-owned utility company, Tenaga Nasional Berhad (TNB). As Bitcoin's price volatility has recently intensified—hitting highs of $126,000—the number of power-theft-related mining cases has surged to around 3,000 as of October. In response, the Malaysian government established an inter-agency task force on November 19, comprising the Ministry of Finance, the central bank, and TNB, to devise better enforcement measures. Deputy Minister for Energy Transition, Akmal, noted that these illegal operations threaten grid infrastructure and exhibit "organized" characteristics.

Across the ocean in the United States, some entrepreneurs are attempting to mitigate energy waste by utilizing the excess heat produced by crypto miners. Bitcoin mining generates about 100 TWh of heat annually, enough to meet Finland’s entire heating demand. New products like the $900 HeatTrio heater combine mining operations with home heating functions, and companies are exploring options to deploy miners in unconventional spaces like car washes and factories to create dual returns.

The Bitcoin mining firm Bitfury recently announced a $50 million investment in Gonka, a decentralized, high-efficiency AI compute network, as part of its larger $1 billion “Emerging Technology Initiative.” This investment aims to support various hardware setups, from single GPUs to entire data centers, capable of contributing computing power for machine learning and scientific research.

Meanwhile, the company CleanSpark has reported impressive fiscal results for 2025: total revenue reached $766.3 million, marking a 102% year-on-year increase. The firm also reversed a previous loss, reporting a net profit of $364.5 million. CleanSpark completed $1.15 billion in 0% convertible bond financing to expand its power and land assets, aiming to transition into a comprehensive compute platform for both AI and Bitcoin mining.

However, the broader Bitcoin mining industry is grappling with profitability pressures. Even as the network’s hashrate climbed to a record 1.1 ZH/s in October, Bitcoin's price fell to around $81,000, pushing hashrate prices below $35/PH/s. According to recent financial reports, public miners face a median hashrate cost of approximately $44.8/PH/s, making it challenging for even efficient miners to break even. The average payback period for miners has extended beyond 1,200 days, with rising financing costs compounding the issue.

In response to these pressures, many miners are pivoting towards artificial intelligence (AI) and high-performance computing (HPC). According to a report, 70% of the world's top ten Bitcoin mining companies are already relying on AI revenue to navigate this bear market. Companies like Marathon, CleanSpark, and Core Scientific are generating income from AI and HPC ventures, with AI hosting revenue often surpassing traditional mining returns. Analysts estimate that annualized revenue per megawatt for AI hosting is roughly 50% higher than that of conventional mining.

Additionally, Russian power companies are utilizing AI technology to combat rampant illegal Bitcoin mining operations. State grid operator Rosseti has begun testing AI analytics embedded in smart meters to detect abnormal electricity usage. Recently, Rosseti and the Federal Security Service (FSB) dismantled a significant mining operation linked to a fraud scheme involving over $1.5 million worth of electricity.

Meanwhile, companies like Bitfarms and Cipher Mining are also transitioning their operations. Bitfarms plans to wind down its Bitcoin mining activities and convert its sites into AI and HPC data centers by 2026. CEO Ben Gagnon believes this strategic shift could yield returns exceeding previous Bitcoin mining revenues.

The rapidly evolving landscape of Bitcoin mining reflects broader trends in energy consumption and technological innovation. As the industry adapts to regulatory scrutiny and financial challenges, those who can successfully pivot to new technologies like AI may find themselves well-positioned for future growth.