The BTC mining industry has undergone significant adjustments recently. In October 2025, the Bitcoin network hashrate surged to over 1.1 ZH/s, subsequently declining steadily and repeatedly falling back to around 900 EH/s in 2026. Mining difficulty saw several significant reductions, including an 11.16% decrease in February and a 10.09% decrease in June, a rare occurrence since 2021.

Meanwhile, many listed mining companies are shifting their business focus towards AI/HPC high-performance computing. Core Scientific’s self-operated mining business has a negative gross margin, but its AI data center hosting business generates substantial gross profit; TeraWulf’s HPC leasing revenue already accounts for 71% of the company’s total revenue. Many mining companies are shifting their facilities, power resources, and capital from mining to the AI ​​hashrate infrastructure sector, raising concerns that AI hashrate is siphoning resources from BTC mining, potentially squeezing Bitcoin mining out of the market and compromising Bitcoin network security.

1. A decline in hashrate does not equate to a network security crisis; Bitcoin’s difficulty mechanism has self-regulating capabilities

Bitcoin has an automatic mining difficulty adjustment mechanism. When many miners exit and the overall network hashrate decreases, the network automatically lowers the mining difficulty, reducing the barrier to entry for remaining miners and allowing them to continue producing blocks and maintaining network operation.

A decrease in hashrate will cause short-term fluctuations in network confirmation speed, but it will not directly destroy Bitcoin network security. Historically, there have been several periods of significant hashrate pullbacks, which the network has weathered smoothly through difficulty adjustments. What truly determines Bitcoin security is not the absolute hashrate value, but whether a single entity can control the vast majority of the hashrate—that is, the degree of decentralized distribution of the hashrate. As long as the hashrate is not highly concentrated, even if the overall hashrate shrinks, the network’s basic security framework remains intact.

2. Mining companies’ shift to AI is a business choice, not an all-or-nothing abandonment of mining

Mining companies’ shift to AI is essentially a diversification strategy, not a collective abandonment of BTC mining.

Reuse of underlying resources: The core assets of mining companies are electricity, land, substations, and data center infrastructure. These resources can be used to run ASIC miners for Bitcoin mining, or they can be modified to host AI hashrate services. When mining profitability declines, AI hosting can provide a long-term, stable cash flow, hedging against the operational risks brought about by drastic fluctuations in cryptocurrency prices and helping companies weather industry downturns.

The two businesses can coexist: Most leading mining companies do not shut down all mining operations, but rather allocate some electricity and land resources to AI businesses, while retaining some for continued mining. AI becomes a “safety net” for the company, not a replacement for mining.

The transformation itself carries risks: AI hashrate services are not a guaranteed profit. The demand for AI hashrate is uncertain, and the costs of data center upgrades and GPU hardware procurement are high. The industry also faces risks of overheated competition and lower-than-expected demand. Transformation does not mean mining companies can rest easy.

3. BTC mining will not be completely squeezed out, but the industry landscape will be reshaped

Bitcoin mining will not be completely squeezed out of the market by AI, but the industry landscape will undergo profound changes:

Eliminating high-cost miners: Miners with high electricity prices and poor operational efficiency will be eliminated during the cycle. Only miners with extremely low electricity prices and strong operational capabilities will be able to remain in the mining industry. The entry barrier for the mining industry will further increase.

Diverging miner structures: Some mining companies will transform into “hashrate infrastructure service providers,” operating both mining and AI hosting; others will focus solely on BTC mining; and still others will completely exit the mining industry. The market will no longer be one where all mining companies rely solely on mining.

Bitcoin price is a key variable: If the price of Bitcoin recovers significantly in the future, and mining profitability improves, some electricity resources that have already shifted to AI may return to mining. Resources flow between the two businesses based on profitability; there is no one-way, irreversible resource grabbing.

4. Potential Risks and Issues Worth Noting

If a large number of listed mining companies continue to scale back their mining operations, it could lead to a shift in Bitcoin hashrate towards smaller, anonymous miners, reducing industry transparency and posing a potential risk of hashrate concentration.

If only a very small number of entities can sustain mining in the long term, it will weaken Bitcoin’s decentralized advantage, a risk that requires long-term monitoring.

5. Conclusion

The AI hashrate wave will squeeze the capital and electricity resources for BTC mining, but it will not completely squeeze Bitcoin mining out of the market. The Bitcoin network, relying on its difficulty adjustment mechanism, possesses strong cyclical resilience. Mining companies’ deployment of AI is more of a corporate diversification and risk-averse strategy. In the future, the mining industry will become increasingly polarized, with high-cost miners gradually exiting the market. Ultimately, the survival of mining will still depend on the economic profitability of mining itself.