Bitcoin Mining Paradigm Shift: The Triple Changes of Hash Rate Decline, BTC Selling, and the Rise of AI Computing Infrastructure

In the last week of April 2026, Bitcoin mining experienced two of the most pivotal transactions in its history.

On April 28th, local time, NASDAQ-listed mining company Core Scientific officially announced that a 300 MW Bitcoin mining farm located in Pecos, Texas, would be converted into a 1.5 GW AI data center park, with the first batch of server rooms expected to be operational by early 2027. To support this grand plan, the company completed a $3.3 billion senior secured note issuance (coupon rate 7.750%, due 2031), combined with a $1 billion credit line previously obtained from Morgan Stanley, bringing total financing to over $4 billion.

Almost simultaneously, another leading miner, Hut 8, issued $3.25 billion in senior secured notes (coupon rate 6.192%, due 2042) to fund the construction of a 245 MW AI data center at the River Bend park in St. Francisville, Louisiana. The project has signed a 15-year lease agreement worth approximately $7 billion with cloud service provider Fluidstack, with lease payments guaranteed by Google’s parent company Alphabet. Fitch and S&P have assigned the bonds an “BBB-” investment-grade rating — a rare occurrence in the history of crypto mining.

These two transactions are not isolated events. If we extend the timeline to encompass the entire first quarter of 2026, a more complete picture emerges: the total network hash rate for Bitcoin recorded its first quarterly decline since 2020, dropping approximately 4% to 6%; listed miners sold over 32k BTC in a single quarter, setting a new record; and the cumulative announced AI/HPC contract scale by mining companies exceeded $70 billion.

These signals collectively point to a core thesis: Bitcoin mining is undergoing a paradigm shift from “cryptocurrency mining machines” to “AI computing infrastructure providers.”

From Halving Shock to Collective Turnaround

To understand the scale and urgency of this transformation, we need to go back to the root cause of the industry’s profit model collapse.

In April 2024, Bitcoin completed its fourth halving, reducing block rewards from 6.25 BTC to 3.125 BTC overnight. The revenue per individual block for miners halved instantly. Post-halving, the total network hash rate did not decline sharply as some expected; instead, it continued to rise, reaching a historic high of approximately 1,160 EH/s by the end of 2025. The combination of increasing hash rate and halving meant that the amount of Bitcoin earned per unit of computing power was being continuously diluted.

The real profit crisis erupted in Q4 2025. According to CoinShares’ Q1 2026 mining report, the weighted average cash cost for listed miners to mine a single Bitcoin rose to about $79,995, while Bitcoin prices fluctuated between $68,000 and $70,000 during the same period. For each BTC produced, miners faced an on-paper loss of approximately $19,000.

Entering early 2026, hashprice (revenue per unit of hash power) further declined to about $28 to $30 per PH/s/day, hitting a post-halving low. According to CoinShares’ estimates, roughly 15% to 20% of existing mining equipment was already unprofitable.

Under this financial pressure, miners’ capital allocation logic underwent a fundamental shift. The AI infrastructure deals that emerged in Q1 2026 were not impulsive moves but collective responses to this profitability crisis.

The following timeline highlights key nodes in this wave of transformation:

Dissecting the Three Logical Foundations of Miner Transformation

The Fundamental Difference in Financing Structures

The two financings by Core Scientific and Hut 8 represent two distinct capital paths, and their differences are key to understanding industry segmentation.

Core Scientific’s $3.3 billion bonds are high-yield (junk bonds), carrying higher credit risk and thus higher financing costs. The company has signed a 12-year custodial agreement with AI cloud provider CoreWeave, expected to generate $10 billion in revenue, serving as the debt repayment basis. During this transition, the company has continued to sell Bitcoin holdings to supplement cash flow — its BTC balance has fallen from over 2,537 BTC at the end of 2025 to less than 1,000 BTC, with plans to sell most of the remaining holdings within 2026.

In contrast, Hut 8’s $3.25 billion bonds have an “BBB-” investment-grade rating, with significantly lower financing costs. This rating is supported by a lease payment guarantee from Google’s parent company Alphabet, and a 15-year fixed lease contract that provides predictable cash flow. The bonds are structured as project financing, with no recourse to Hut 8 Corp., isolating project financial risks at the subsidiary level.

Comparison of the two financings:

Top-tier investment banks—Goldman Sachs, J.P. Morgan, Morgan Stanley—jointly underwriting Hut 8’s debt issuance signals that mainstream finance is beginning to back the AI transformation of miners.

The Structural Causes of Hash Rate Decline

In Q1 2026, Bitcoin’s total hash rate dropped from about 1,066 EH/s (30-day average) to approximately 1,004 EH/s, a decline of about 5.8%. This data, confirmed by Hashrate Index, is attributed to the mass shutdown of outdated equipment.

From a macro perspective, the hash rate has decreased roughly 4% since the start of the year — the first Q1 decline since 2020, ending a five-year streak of double-digit growth.

Three main drivers underlie this decline: first, persistently low hashprice eroded profitability for mid- and low-end miners, forcing passive exits; second, some miners actively shifted electricity resources from Bitcoin mining to AI hosting; third, the winter storm Fern in late January 2026 caused widespread outages in Texas and other mining hubs, with some miners required to curtail power under demand response agreements.

Despite the short-term decline, CoinShares still projects the hash rate could rebound to 1.8 ZH/s by the end of 2026, heavily dependent on Bitcoin’s price trajectory — analysts warn that if BTC fails to recover above $100,000, high-cost miners’ liquidation will accelerate.

The Scale and Logic of Miner BTC Sales

In Q1 2026, Bitcoin sales by listed miners hit a record 32k BTC, up about 42% from Q4 2025.

Motivations for selling fall into two categories: operational sales, where miners sell part of their output to cover electricity, equipment upgrades, and operational costs; and strategic sales, where miners deliberately reduce BTC exposure on their balance sheets to free up capital for AI infrastructure.

For example, Riot Platforms sold 3,778 BTC in Q1 2026, far exceeding the 1,473 BTC mined that quarter — indicating they sold not only current output but also inventory. Their BTC holdings shrank from 19,233 BTC at the same period last year to 15,680 BTC, citing ongoing capital expenditure needs.

Bitdeer’s approach is more thorough: as of April 2026, the company maintains zero BTC holdings, with weekly production and sales perfectly matched.

Core Scientific sold $175 million worth of BTC in March 2026, explicitly stating plans to sell most of its remaining holdings over the year.

Notably, this wave of miner selling coincides with a massive influx of institutional buying — in the past week, net purchases by listed companies exceeded $2.5 billion. The synchronized increase in buying and selling is reshaping Bitcoin’s supply-demand dynamics, with institutional buy-side offsetting miner sell pressure.

Public Opinion and Divergent Views

Regarding the collective AI transformation of miners, market opinions are sharply divided.

Valuation Repricing and Cash Flow Improvement

This view dominates among Wall Street analysts. Its core argument is that AI data centers generate long-term, fixed-dollar contract revenues, fundamentally contrasting with Bitcoin mining’s high volatility. Contracts typically span 10–15 years, with highly predictable income, and hosting operations can achieve profit margins of 80%–90%.

All 11 analysts covering Core Scientific have issued “Buy” ratings, with a median target price of $26.48. CORZ’s stock has surged over 200% in the past 12 months, while Bitcoin’s price has fallen about 11%, which is interpreted as the market rewarding the narrative of transformation.

Hut 8’s stock price soared approximately 478% over the past year. Arete Research initiated coverage with a “Buy” rating and a $136 target, the highest in the market; BTIG raised its target to $90; Benchmark reiterated a “Buy” rating with an $85 target; Piper Sandler called HUT the best-performing miner in its coverage universe.

Capital Expenditure Black Hole and Delivery Risks

Not all voices are optimistic. Matt Schultz, CEO of CleanSpark, issued a clear warning at the “Bitcoin 2026” conference: after upgrading to AI data centers, the cost per MW skyrocketed from about $500k to $10–$12 million — an increase of over 20 times; staffing levels rose from about 1 person per 10 MW to roughly 8. The most critical issue is that major cloud providers’ lease terms are extremely aggressive — a single-day delay in delivery could wipe out an entire year’s worth of contract revenue.

Schultz cautioned the industry not to focus solely on short-term stock price boosts from signing announcements but to be aware of the enormous challenges in actual delivery.

CoinShares’ research similarly points out that some hybrid miners face sharply increased on-paper costs per BTC due to AI infrastructure investments and carry heavy debt loads. For example, IREN has $3.7 billion in convertible notes, and TeraWulf’s total debt reaches $5.7 billion — these debts become tangible financial burdens before revenue is realized.

Long-term Security of the Bitcoin Network

A deeper controversy revolves around Bitcoin network security. The decline in total hash rate reduces the theoretical cost of defending the network against attacks. If major miners continue shifting electricity from mining to AI hosting, the future growth potential of total hash rate could be structurally suppressed.

However, CoinShares offers a hedging perspective: the exit of high-cost miners may improve remaining miners’ profitability, as difficulty adjustment mechanisms will automatically lower mining difficulty. Additionally, the geographic diversification of hash rate — with emerging regions like Paraguay (4.3%), Ethiopia (2.5%), UAE, and Oman (each around 3%) — could enhance network resilience.

Industry Impact Analysis: Three Propagation Effects

Impact of Hash Rate Decline on Network Security and Distribution

The overall decline in hash rate has a dual effect on network security. In the short term, it lowers the theoretical cost of a 51% attack. But from a practical standpoint, the economic cost for an attacker to acquire most of the network’s hash power remains prohibitively high — even at around 1,000 EH/s, the investment in mining hardware and electricity is astronomical.

More critically, the structural shifts in hash rate distribution are noteworthy. As of Q1 2026, the US accounts for 37.4% of the network hash rate (~375 EH/s), Russia 16.9%, and China 12%. These three countries together hold about 65% of total hash power, indicating high concentration. Yet, growth in emerging regions is rapid — Paraguay’s cheap hydroelectric power (around $0.033 per kWh) has increased its share to 4.3%, with Ethiopia, UAE, and Oman also rising quickly.

If the “Mined in America Act” proposed by Republican senators passes, it could further incentivize the reshoring of mining hardware manufacturing to the US, potentially shifting the current pattern where approximately 97% of specialized miners are produced by Chinese-affiliated firms.

Impact on Miner Asset Structures and Business Models

Miner balance sheets are undergoing a historic reshaping. Previously, core assets were Bitcoin holdings and mining hardware; moving forward, more assets will take the form of data center real estate, power contracts, and long-term hosting agreements.

In terms of revenue structure, some leading miners’ AI-related income already accounts for 30%–39% (Core Scientific at 39%), and is expected to rise to 70% by the end of 2026. This shift means these companies are transforming from “Bitcoin producers holding assets” to “infrastructure operators centered on hash power leasing, with Bitcoin mining as a supplementary activity.”

Impact on Token Selling Pressure and Market Supply-Demand

Massive Bitcoin holdings liquidation by miners creates short-term selling pressure. But from a structural perspective, this selling is “front-loaded” — miners are selling accumulated inventory, not future output. Once inventory is depleted to target levels, subsequent selling pressure will decrease significantly.

More importantly, the concentrated buying by listed companies is changing market supply-demand dynamics. Weekly net purchases exceeding $2.5 billion by institutions are roughly 1.1 times the miners’ quarterly sales (~$2.2 billion). The market’s pricing power is shifting from miners to institutional investors.

Conclusion

In Q1 2026, Bitcoin mining stands at a crossroads. The first six-year decline in hash rate, a record sale of 32k BTC, and over $7 billion in AI infrastructure financing by Core Scientific and Hut 8 are not isolated industry fluctuations but facets of a deep structural transformation.

The shift from “cryptocurrency mining machines” to “AI computing infrastructure providers” remains in early validation. Its success ultimately hinges on three core variables: the actual delivery and operational efficiency of AI data centers, the subsequent trajectory of Bitcoin’s price, and miners’ ability to balance high leverage expansion with financial discipline.

The outcome of this “century’s grand shift” will not only determine the fate of a batch of listed companies but also profoundly influence the foundational security of the Bitcoin network and the role of crypto mining within the broader digital economy landscape.