BTC mining metrics improve, but not enough to halt the AI pivot

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The combo of BTC’s rising token price and falling network difficulty is offering some relief for block reward miners, but nowhere near enough to convince the ‘pivot to AI’ crowd that they’re making a mistake.

• Mining metrics improve, but miners still ditching BTC for AI
• ABTC still losing money, Hut 8 wows investors with AI deal
• Riot Platforms going nuclear for AI
• Core Scientific could be down to one mining site by year’s end
• Colombia wants to lure miners, Malaysia wants to throttle illegal miners

On May 2, the BTC network’s mining difficulty rate fell 3.1 points to 132.5 trillion hashes (the average number of guesses required to ‘find’ a new block and claim the block reward), bringing the net decline to 10.7% over the past four months.

Combined with the recent not-at-all-manipulated surge in the BTC token’s price, the average all-in cost to mine a single BTC is only several hundred dollars below the token’s value. For those miners fortunate enough to have ample access to cheap electricity, it’s a rare and welcome opportunity to book some rare profits.

But the next difficulty adjustment on May 15 is expected to inch back up to 134.3 trillion, and the behind-the-scenes price pumping could end on a moment’s notice. So don’t expect too many miners to reverse course on their ongoing ‘pivot’ to serving as data centers for AI companies, which provides far more reliable revenue streams than securing the BTC network. In fact, the list of pivoters who have abandoned their former mining entities may be growing.

Consider IREN (NASDAQ: IREN), which reported a more than one-quarter decline in mining revenue during its fiscal Q2, while AI Cloud Services revenue more than doubled. Bernstein analyst Gautam Chhugani said last month that the grim math means IREN “will eventually sunset” its mining operations, possibly producing its last BTC before 2030.

IREN would join an ever-longer parade of miners eager to distance themselves from their mining origins. For instance, while mining still produces the bulk of revenue for TeraWulf (NASDAQ: WULF), the company’s focus is rapidly shifting to AI. In March, CEO Paul Prager called BTC mining “not a great business, pretty volatile, no real predictable revenues.”

Cipher Digital (NASDAQ: CIFR) recently rebranded from Cipher Mining to reflect its mining ‘exit strategy.’ Bitfarms (NASDAQ: BITF) similarly rebranded as Keel Infrastructure after declaring “we are no longer a Bitcoin company.” Hell, even industry media platform The Miner Mag rebranded as The Energy Mag.

Cipher’s Q1 earnings report showed mining revenue falling 29% year-on-year, and this figure will soon fall off a cliff after Cipher sold its stake in three joint venture mining sites earlier this year. On May 5, Cipher CEO Rodney Page told analysts that “I think Bitcoin will not be a part of our story by 2030 … end of ’27 at the latest, if not sooner,” adding that mining “will become immaterial as far as our financials go before it is completely wound down.”

Cipher is also selling off its BTC treasury, with most of the sales earmarked for funding its AI pivots. The Energy Mag estimated that publicly traded miners collectively sold over 32,000 BTC in the first quarter of 2026. That would be a new record, surpassing the ~20,000 BTC that miners unloaded as 2022’s flood of crypto bankruptcies signaled the onset of ‘crypto winter.’

The sector-wide token selloff and AI pivots are largely because the BTC mining model is utterly divorced from the original intentions of Bitcoin creator Satoshi Nakamoto. The block subsidy halves roughly every four years—the next halving is only two years away, and will reduce the per-block reward to just 1.5625 tokens—and network transaction fees were supposed to take their place as miners’ primary financial incentive.

But BTC is a transaction ghost town because its users are now primarily institutions that buy-and-mothball the tokens. The bulk of BTC ‘transactions’ occur on centralized exchanges, and these are simply speculative trades for other tokens. It’s not exactly the ‘peer-to-peer electronic cash’ model of the Bitcoin white paper.

So, no transaction fees, falling rewards, unpredictable token prices, and a network difficulty rate that’s 10x higher than five years ago. Any miner that isn’t pivoting to AI should have their head examined. And on that note…

ABTC loses $81.8 million, insists underlying business is profitable

The Trump-linked American Bitcoin Corp (NASDAQ: ABTC) completed the rollout of 11,298 additional ASICs at its Alberta mining site last month, bringing its total fleet to 89,242 rigs, each digging for digital gold at a healthy rate of 28.1 exahash per second (EH/s).

On Wednesday, ABTC issued its earnings report for the first three months of 2026, during which the company mined 817 BTC, up from 554 in Q4 2025, marking a new all-time high for the company since its launch last spring.

However, mining revenue fell from $78.3 million in Q425 to $62.1 million in Q1, reflecting the steep decline in BTC’s price since its all-time high of $126,080 last October. Worse, ABTC posted a net loss of $81.8 million for the quarter, up from the $59.5 million it lost in Q425.

ABTC CEO Mike Ho noted the “significant non-cash headwinds” facing the company in Q1, without which “the underlying business was profitable—and we did not sell a single coin.” Indeed, ABTC’s BTC treasury held 7,021 tokens by the quarter’s end, good enough for 16th overall on the treasury charts, and chief strategy officer Eric (son of Donald) Trump says the treasury has since grown to “over 7,300.”

It helps that ABTC enjoys an economic advantage other miners don’t: the dominant ASIC manufacturer (Chinese firm Bitmain) provided 16,299 rigs to ABTC last year, effectively on spec, with full payment (in BTC) not due for two years. We’ll pause here to note that Bitmain was said to be under U.S. federal law enforcement scrutiny at the time of that deal, but the firm may have dodged that bullet by making friends with Trump’s kids and pledging to shift some of its production stateside.

We’ll briefly note that the miner that supplied ABTC with its initial fleet of rigs, Hut 8 (NASDAQ: HUT), had a far better investor reaction to its Q1 report, despite seeing its net losses nearly double to $253 million as it (a) wrote down the value of its legacy BTC treasury, and (b) pays the costs of its ongoing AI pivot. Hut 8’s shares closed Wednesday up more than 35% to $108.94, pushing its year-to-date share gains over 137%.

However, the investor enthusiasm was more a response to Hut 8’s announcement of a 15-year, $9.8 billion data center lease deal with a tenant described only as “a high-investment-grade company.” This mystery tenant will center its data at Hut 8’s Beacon Point site in Nueces County, Texas.

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Riot going nuclear for AI

Riot Platforms (NASDAQ: RIOT) reported a net loss of $500 million in the first quarter of 2026, despite a modest 3.5% year-on-year rise in revenue to $161.4 million. Mining revenue was down more than one-fifth to $111.9 million, but Riot’s first quarter of AI data center revenue added $33.2 million to this pile.

During Q1, Riot’s all-in cost of mining a single BTC—including depreciation costs of retiring older ASIC mining rigs—was 126.7% of the token’s average price during the quarter. Riot booked $76.1 million in depreciation expenses during Q1 and expects to suffer a further $197.8 million in such costs before year’s end.

As has been the recent case with other publicly traded miners, Riot’s top execs were asked zero questions about mining during their post-earnings analyst call. There was only one Bitcoin-related question, which was to confirm that Riot will lean heavily on BTC sales (3,778 sold in Q1) to fund its AI expansion plans.

Speaking of, Riot just announced the signing of a memorandum of understanding with small modular reactor (SMR) firm Terrestrial Energy on “a collaboration to develop a best-in-class pairing of future data centers with co-located advanced nuclear plants.” The new partners will explore opportunities “at multiple candidate sites, including existing Riot facilities in Texas and Kentucky.”

Despite its AI push, Riot lost its chief data center officer last month. In a Securities and Exchange Commission (SEC) filing, Riot said Jonathan Gibbs left the company effective April 12, less than a year after he joined the firm. Even more curiously, Gibbs exited the stage despite knowing he’d be forfeiting $18.7 million worth of Riot shares that had yet to vest.

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Core Scientific: “Only one or two” of our sites will be mining by year’s end

Core Scientific (NASDAQ: CORZ) is another miner that is effectively running out the string on its mining operations and selling off its BTC to fund its AI pivot. Core’s Q1 report shows total revenue of $115.2 million, $77.5 million of which came from AI ‘colocation’ operations, up from just $8.6 million in Q125.

Meanwhile, self-mining revenue was just $30.1 million in Q1, less than half the $67.2 million mining revenue generated in the same period last year. Core expects mining activity to “continue winding down over the course of the year, with a meaningful step down in miners online in the second half.” Core believes “only one or two sites” will still be mining by year’s end.

In the meantime, the costs associated with Core’s pivot resulted in a Q1 net loss of $347.2 million, a serious whiplash from the $576.2 million profit Core enjoyed in Q125. Core’s share price surged 11% to $24.63 on Wednesday, although it dropped 8% to $22.65 in after-hours trading.

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Colombia wants legal miners in, Malaysia wants illegal miners out

The government of Bhutan continues to sell off its once-mighty BTC treasury, with the latest Arkham stats showing the state’s wallets containing 3,220 tokens, about 300 fewer than last month’s holdings and about 10,000 fewer than December 2024’s peak. There’s also been no significant inflows of BTC for over a year, suggesting the demise of the country’s once-celebrated state-run mining operations.

But not everyone’s giving up. Colombia’s President Gustavo Petro made waves this week by tweeting his call for the country to welcome mining operators. Petro was responding to Luxor Technology’s Alessandro Cecere tweeting about how both Venezuela and Paraguay generate more hydroelectricity than their citizens consume, but “Paraguay built the infrastructure to monetize it. Venezuela did not. Not yet.” Paraguay ranks fourth among nations by mining hashrate.

Petro appears eager for renewable-rich Colombia to get into this game, tweeting that Paraguay’s example “could be the case for Santa Marta, Riohacha, and Barranquilla,” cities along the country’s Caribbean coastline. Petro proposed a dialogue between the government and the Wayúu local indigenous community “so that they can be co-owners of this project,” which he claimed would be “an immense boost to the development of the Caribbean.”

Other countries are more concerned with stamping out illegal mining operations that drain local energy grids without paying their way. Last November, Malaysian authorities said illegal miners had stolen RM4.6 billion (US$1.1 billion) worth of power since 2020. This week, the country’s deputy energy minister warned that illegal miners continue to steal RM700 million ($178 million) annually, despite government crackdowns.

The deputy minister went as far as to urge landlords to transfer their accounts with local utility Tenaga Nasional Bhd to their tenants as a precaution against illegal mining being conducted on their properties. The government further warned that illegal mining ops pose a significant fire risk due to jerry-rigged efforts to bypass electricity meters and urged the public to report any suspicious activities.

Russia’s battles with illegal miners also aren’t going great, as just 3% of the country’s estimated 190,000-plus miners have so far officially registered with the state, despite the country’s Duma prepping new rules that would impose stiff penalties on unauthorized miners.

Last month, authorities in Russia’s Bashkortostan region arrested a 31-year-old man who reprogrammed his electricity meter to reduce its readings by 96% in a bid to mask the illegal mining operation in his garden house. The local utility claims this deprived it of RUB1.8 million ($23,000) in revenue between July 2024 and February 2025.

Even well-intentioned Russian miners don’t always escape punishment. A businessman in St. Petersburg is challenging a RUB17 million ($227,000) tax penalty after he registered as an entrepreneur with the Federal Tax Service but claimed to be mining as an individual, which carries a lower tax rate.

Adding insult to injury, the miner claims his mining profits in 2025 were just RUB81,000 ($1,100). The man is challenging the tax penalty, and some onlookers believe he’s got a good case of overturning this decision. That is, assuming he doesn’t fall from a window before the ruling is issued.

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