BTC’s ‘bear market’ hashrate; IREN done with mining by year’s end

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The BTC network’s falling hashrate might be good for block reward miners who resist the urge to ‘pivot to AI,’ but the mining sector’s widespread ‘capitulation’ shows no sign of letting up.

• Hashrate bear market: a good thing?
• Rogue miner sparks Oklahoma anger, voters protest data center water use
• Cango gets out of NYSE’s doghouse
• IREN says it will be out of mining by year’s end
• Hyperscale shuts Michigan mining site, plots ‘blockchain ecosystem’

Long-suffering block reward miners who thought the BTC token’s recent upward surge had already peaked were offered new hope on Thursday as the token rebounded from Wednesday’s dip to $76,300 by surging close to $82,000.

As always, it wasn’t clear precisely what lit the fire under BTC, but theories include Federal Reserve Gov. Chris Waller saying he’s not in favor of raising interest rates at the Fed’s meeting later this month. There’s also the U.S. Treasury Department’s announcement of another $12.5 billion debt buyback (with new debt) and the doubling of its liquidity support buybacks from $2 billion to $4 billion.

(We know BTC isn’t technically a corporation, but it sure does seem that the success or failure of the alleged ‘future of finance’ is heavily dependent on how much corporate welfare Washington is willing to dispense. But we digress…)

It remains to be seen whether BTC’s higher price can convince any miners to rethink their ongoing ‘pivot’ to providing data center infrastructure for artificial intelligence (AI) and other high-performance computing (HPC) tasks. But given the unpredictability, volatility, and (generally) unprofitability of ‘digital gold,’ we suspect few miners will devote much time to rethinking their pivot plans.

As you’ll read a little further down, every month seems to bring new reports of large publicly traded mining operators announcing the imminent end of their mining operations. Some of the few remaining ‘pure play’ miners are convinced this means more BTC (and thus more money) for them, but the resulting concentration of the critical system that ensures the network’s security should be sounding alarms sector-wide.

But never mind all that. This wine glass was definitely half-full, if not overflowing, at last week’s Bitcoin Asia 2026 confab, where Raphael Zagury, CEO of the Tether-linked BTC ‘treasury’ firm Twenty One Capital (NASDAQ: XXI), as well as the Tether-linked Elektron Energy mining firm, gave a presentation called Here Be Dragons: Bitcoin’s First Ever Hashrate Bear Market.

Zagury said, “If you look at the public mining companies out there, there really isn’t anybody staying the course to mine Bitcoin at scale. Pretty much everybody is leaving the industry right now.” Zagury compared this period to 2021, when China’s crackdown on domestic miners caused a serious hashrate plunge, but the numbers gradually recovered as Chinese miners relocated to other markets.

“What we’re seeing now, it’s very different … we hit close to 1.3 zetahashes late last year [when BTC hit its all-time price high in October], and it’s been gradually, still gradually, coming down. This has been the longest period that we’ve seen from an all-time high until recovery.”

Zagury offered hope to pure-play miners, suggesting that “the beautiful thing about Bitcoin mining being in a bear market of hashrate is that for those that stay around … they naturally get a higher share of the market … if Bitcoin price is going up by 50-100% a year, and network hashrate is flat, you have a much higher chance of outperforming.”

Okay, but that rosy scenario ignores the reality that, even with its current surge, BTC is still more than one-third off its October price peak and is only at par with its value from two years ago. Simply put, miners have bills that can’t be paid in hopium.

Ironically, Zagury suggested the pivoters have it right, leveraging “all this optionality that you have with Bitcoin mining.” Meaning, if you have contracted access to cheap power, you can switch off mining ASICs and switch on AI/HPC-focused GPUs as the market dictates. That is, assuming the general public doesn’t one day decide to storm the barricades and burn your facility to the ground, with or without you inside. Far-fetched? Read on.

Water, water, everywhere…

Late last month, Athlon Blockchain, a small-scale miner/data center operator with a facility near El Reno, Oklahoma, was flagged as the source of a water leak of over 3 million gallons. Seems Athlon built a fire hydrant on its site that failed, and the resulting leak caused the city’s water pressure to plunge, cutting off access entirely for some local residents.

Investigators ultimately discovered that Athlon’s site was operating out in the open but without the necessary permits. Athlon was issued a building permit in 2021, but the city issued a stop-work order in June 2023 due to “multiple fire and life-safety code violations.”

The city gave Athlon until December 2023 to remedy its shortcomings, but Athlon apparently ignored this deadline and—incredibly—city officials never followed up. A city manager copped that “we failed,” having assumed that “people would respect the stop work order.”

Athlon’s property has since been condemned, and the city insists that the company will pay the tab for the water loss and the labor required to fix it. That is, assuming Athlon (a) has the money, and (b) doesn’t choose to drag the matter out in court in the hopes the city will decide to cut its losses rather than throw good money after bad.

While this farce is the action of a small-time cowboy outfit, the rapid expansion of data centers across the U.S. has resulted in serious pushback from local populations. Polling shows a majority of Americans don’t want data centers near their homes, and public anger towards the operators of these projects is growing by the week. Since this is an election year, public officials in some states are pretending to care about these concerns.

Apart from sheer NIMBYism, the voracious appetites that mining/AI sites have for both power and water are a major concern. Efforts have been made at both the state and federal levels to require new sites to generate their own power to reduce the strain on local grids. But water scarcity is not so easily fixed, and disputes over water access are becoming particularly heated in many southern states where many of these sites are being built.

Enter Howard Lutnick, U.S. Commerce Secretary, founder of Wall Street financial services firm Cantor Fitzgerald (NASDAQ: ZCFITX), and Friend of Tether. In an appearance on Bloomberg Radio this week, Lutnick rubbished data center critics for spreading “propaganda” about data centers’ water usage, saying, “data centers don’t use water. This is just misinformation.” Critics quickly resurfaced a Fox News interview from 2025 in which Lutnick said: “These AI things, they suck water. They need water.”

This weekend, President Trump posted on his Truth Social platform that communities that reject data centers would “end up being backwards and poor.” Possibly, but at least they’ll be able to bathe their children.

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Cango no longer in NYSE doghouse

Kicking off our final round of Q2 miner results, Cango (NYSE: CANG) booked a net loss of $81.6 million in the three months ending June 30, a major improvement from Q1’s $261 million loss. Revenue totaled $50.8 million, of which $47.4 million came via mining. ‘Other’ revenue (aka AI/HPC from Cango’s EcoHash Technology offshoot) doubled year-on-year to $3.4 million.

The Q2 revenue figure was half the Q1 total and barely one-third of the sum generated in the same period last year, reflecting the company’s divided loyalties as it accelerates its AI pivot.

Mining’s harsh economics were on full display as the cost of revenue ($50.7 million) exceeded what mining brought in, and that figure balloons to $67.6 million once you include depreciation of Cango’s aging ASICs. Throw in another $42.9 million in ASIC write-downs, and it’s not hard to see where this quarterly ship ran aground.

Cango said it continues to “actively right-size its mining operations,” boasting a total operating hashrate of 27.5 EH/s at the quarter’s end. Cango mined 656 BTC in Q2, barely half Q1’s total, although the number of BTC in its ‘treasury’ rose by 30 to 1,056.

Cango CEO Paul Yu said the company was focusing on “unit economics rather than scale” in its mining operations. Cango has also begun hedging its BTC operations via short-term loans based on mining production over one- or two-month periods.

In another positive, Cango announced Thursday that it had received official word from the New York Stock Exchange that the company was once again in compliance with the NYSE’s listing standards. Cango was warned in March that its share price had fallen below the $1 minimum, prompting the company to conduct a 10-for-1 reverse stock split in July.

The question is how long Cango will be able to maintain that compliance, as its shares tumbled more than one-fifth following the release of its Q2 figures. However, having sunk to $1.87 by Wednesday’s close, the shares rebounded Thursday, finishing the day at $2.14 (+14.4%).

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IREN to bid buh-bye to mining by year’s end

IREN (NASDAQ: IREN) closed out its fiscal year on June 30, reporting a net loss of $648 million in its fiscal Q4, significantly worse than the $248 million loss reported in Q3. Q2’s losses were driven by $450.4 million in impairment charges from decommissioned ASICs as the company accelerates its hard pivot away from mining into AI’s open arms.

While total revenue slipped 5% to $137.2 million in Q2, AI Cloud Services revenue more than doubled to $70.5 million, marking the first time this division has generated more revenue than mining ($66.7 million, -40% from Q1). For FY26 as a whole, AI revenue rose nearly 8x to $128.8 million while mining improved a more modest 19% to $578.2 million.

Mining revenue will continue to decline going forward, with the company now saying it expects mining operations to be “effectively decommissioned by the end of December 2026.” Accordingly, IREN’s earnings call featured not a single question from analysts about mining. 

IREN co-CEO Daniel Roberts said the company’s 2026 AI capacity is “largely sold out” as IREN “broadened our customer base to include hyperscalers, enterprises, AI developers and frontier labs.”

However, IREN’s share price tanked hard following its earnings report as investors digested the company’s pricey plans to continue building out AI infrastructure. The company suggested its expansion costs could range from $25 billion to $30 billion in FY27.

After sinking below $35 last week, the stock has rebounded somewhat, closing Thursday at $41.65 (+5.2%).

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Hyperscale Data loves crypto, just not in Michigan

Another miner appearing somewhat eager to put mining in its rearview mirror is Hyperscale Data (NYSE: GPUS), which announced this week that it had “ceased all Bitcoin mining operations at its Michigan data center” as it pivots the facility to the world’s largest Chuck E. Cheese facility.

Just kidding. Hyperscale is revamping the Michigan site to prepare for the arrival of the unnamed “California-based neocloud provider” that has taken out an initial 10-year lease with two five-year extension options. As a result, all mining rigs in the facility were shut off as of September 1.

While Hyperscale bills itself as “AI powered, Bitcoin backed,” the Michigan pivot will allow the company to “dedicate available electrical capacity, physical infrastructure, personnel and capital resources…  to ultimately meet the demanding needs of the growing AI industry.” Twisting the knife a little further, the company said it “expects to recognize additional gains” from selling off its now redundant Michigan mining rigs.

In case anyone missed the point, CEO William Horne referenced a VanEck analyst who said earlier this year that “Bitcoin mining companies, like ours, that could repurpose existing sites for AI were ‘sitting on a gold mine.’” So never mind ‘digital gold,’ AI offers the real thing.

Hyperscale controls two other facilities in Montana, one of which operates 10 MW of power dedicated to mining. In June, that mining site received a ‘will serve’ letter from the local power utility for up to 125 MW of additional power (subject to “numerous conditions”).

The company says it views Montana as “a strategic long-term opportunity to develop power-intensive infrastructure capable of supporting Bitcoin mining, AI computing, cloud infrastructure,” and other HPC roles. But it’s anyone’s guess which one of those functions might win the contest for all that extra power.

Hyperscale’s Q2 results showed overall revenue of $34.8 million, of which $3.4 million was grouped under ‘other revenue.’ That’s a significant premium from the $450,000 that ‘other revenue’ contributed in the same period last year, an increase the company credited to Hyperscale’s ‘blockchain initiatives.’

The results included a quote from founder/chairman Milton ‘Todd’ Ault III, in which he claimed, “we are still early in the development of the Ault Blockchain ecosystem,” and that the year-on-year revenue gains “reinforce our conviction regarding its long-term potential.” (Just not in Michigan, apparently.)

Hyperscale offered a long list of ‘upcoming Ault Blockchain products,’ including a decentralized exchange, tokenization of real-world assets, “lending, collateral and digital-asset vault applications,” and more.

There’s also “blockchain-based payment functionality” based on Bitcoin Max, which Ault previously described as a “Swiss-structured trust designed to hold Bitcoin permanently, while fiat activity works quietly in the background to support ongoing Bitcoin accumulation.” (The BMAX site still features only a ‘Coming 2026’ homepage, but perhaps there’s more going on in the background.)

Ault claimed his long-term objective is to “build an integrated capital-markets ecosystem where users can trade, tokenize, lend against, collateralize, and deploy digital and real-world assets. We believe the opportunity is substantial and that blockchain-related revenue has the potential to exceed the combined revenue generated by our other operating businesses.”

Clearly not lacking the courage of his convictions, Ault issued a letter to stockholders on Thursday in which he argued that the market was seriously undervaluing Hyperscale. Ault said Hyperscale is “not simply an AI data center company,” then listed all the other irons the company has in the fire. For the record, “digital assets” appeared last on that list, well behind ‘crane rental.’

Hyperscale currently has 215 BTC tokens sitting in its ‘digital reserve,’ which contained over 1,000 BTC as recently as July. Hyperscale’s last recorded BTC sale, 65 tokens on Sept. 1, was intended to help fund the transition of its Michigan site.

Just a suggestion, but Hyperscale’s promised blockchain wonder products better get a move on. Ault’s ‘we’re undervalued’ missive to investors was sparked by the fact that Hyperscale’s shares are currently trading at record lows, closing Thursday at $0.19 (-3.6%).

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