The landscape of Bitcoin mining is undergoing a significant transformation as miners pivot towards artificial intelligence (AI) due to diminishing rewards. Companies like Iren, Applied Digital Corp, and Hut 8 Corp have started repurposing their mining equipment for AI-related tasks, experiencing substantial share price increases in 2025.
However, not all miners are merely diversifying; some are completely abandoning Bitcoin and the broader crypto mining sector. For instance, Bitfarms has recently divested its Paraguay mining facility to focus on its North American high-performance computing and AI energy infrastructure set for 2026. Similarly, Riots Platform entered into an AI partnership with AMD, financing this initiative by liquidating 1,080 BTC from its reserves. Such strategic moves have contributed to downward pressure on BTC prices.
The mining sector is grappling with rising operational costs that exceed the current market price of Bitcoin. The Hash Ribbon indicator, which tracks miner capitulation, signaled concerns in late November, prompting miners to sell BTC to meet their financial obligations. Historically, this capitulation has served as a signal for potential market bottoms and buying opportunities, particularly when the 30-day moving average crosses above the 60-day moving average.
Despite the potential for a price rebound, the transition towards AI mining sheds light on critical vulnerabilities within the Bitcoin network. Each BTC halving event reduces miners” block rewards by half. From 6.25 BTC post-2020 halving, the rewards will decrease to 3.125 BTC after the 2024 halving, and further to 1.5625 BTC after the anticipated 2028 event. This trend raises questions about the sustainability of Bitcoin mining profitability unless there is a significant surge in the cryptocurrency”s value.
The decline in block rewards places increased reliance on transaction fees to sustain miners” operations and network security. As these rewards diminish and transaction fees fail to provide adequate compensation, experts like Justin Bons, founder of Cyber Capital, have expressed concerns that Bitcoin“s security may weaken. The future of mining, particularly in the context of AI advancements, remains a pivotal topic for the Bitcoin community.
