As crypto mining profits shrink due to declining energy costs, the transformation of cryptocurrency mining companies into AI and high-performance computing (HPC) infrastructure services has become a clear trend. Miners are leveraging their existing advanced computing capabilities and energy infrastructure to explore new opportunities in the rapidly growing artificial intelligence sector.

According to the latest report from TheMinerMag, Bitcoin mining costs are expected to exceed $70,000 in Q2 2025, representing approximately a 9.4% increase from Q1's $64,000. With diminishing mining returns after Bitcoin halving, mining companies urgently need diversification.

**Bitcoin Halving Forces Miners to Diversify**

In April 2024, Bitcoin's fourth halving quietly reset the game rules for miners. Block rewards dropped from 6.25 BTC to 3.125 BTC. Maintaining the existing model means paying energy costs and upgrading equipment. Mining profitability declined from an average of approximately $0.08 per day (1 TH/s) to $0.055 per day (1 TH/s). Post-halving, profit margins became tighter.

Bitcoin mining costs are higher than ever, and many miners realize the old model—mine, sell, repeat—is no longer viable. Some miners discovered they already possess the foundation for transformation: facilities built for high-energy consumption machines. They began repurposing their infrastructure for artificial intelligence computing.

**Transformation Trend**

Core Scientific took the lead with high-profile action. In June 2024, it signed a 12-year, $3.5 billion GPU infrastructure hosting agreement with AI cloud provider CoreWeave, Inc. This represents one of the largest AI hosting deals in history. The contract provided Core with a long-term revenue source largely independent of Bitcoin prices, triggering quiet competition within the mining sector.

Riot took similar measures. In January 2025, Riot suspended its 600-megawatt Bitcoin mining facility expansion plan in Corsicana and began repurposing the facility for sale to hyperscale data centers and AI companies. The company shifted from expanding hash rate to seeking AI tenants.

On August 11, MARA Holdings (MARA.US) agreed to acquire a 64% stake in Exaion, a technology subsidiary of French utility company EDF, for $168 million in cash. Under the agreement, MARA also has the option to invest an additional $127 million to increase its stake to 75%. EDF will continue to retain a minority shareholding. This acquisition aims to expand MARA's business layout in the AI infrastructure sector.

The latest example is TeraWulf (WULF.US) signing two ten-year agreements with Fluidstack to provide high-performance computing clusters for major cloud service providers. Under the agreement, TeraWulf will utilize its Lake Mariner data center campus in western New York to deliver over 200 megawatts of critical IT load. The total contract revenue reaches $3.7 billion, and if two five-year renewal options are exercised, the total contract value will increase to $8.7 billion.

Google has agreed to invest $1.8 billion to support project construction for project-related debt financing. In return, Google will receive warrants to subscribe for approximately 41 million TeraWulf common shares, equivalent to an 8% equity stake.

Currently, most miners are still mining Bitcoin. But this is no longer the entire business. It's just one of many revenue sources that may include AI hosting, GPU leasing, energy brokerage, and even sovereign-level computing infrastructure in the future.

It's still too early to judge whether miners' pivot to AI will succeed, and data is too limited. Although high-performance computing (HPC) business has not yet fully expanded to all miners, the profit margin per megawatt for AI computing is significantly higher than mining.

Iris Energy's AI service revenue grew from negligible to $2.2 million in June 2025. This relatively new business segment has a profit-to-revenue ratio of 98%, compared to 75% for the mining business.

**Who Will Be the Next CoreWeave**

These companies hope to emulate the success of peer CoreWeave, Inc. (CRWV.US)—CoreWeave was once a small mining company that has now transformed into a major AI computing provider. In its Q2 2025 earnings report, CoreWeave revenue increased 2x year-over-year to $1.21 billion, with a valuation of $48 billion.

After securing Google's investment, TeraWulf's stock price surged nearly 60% in a single day, reaching a market cap of $3.4 billion. Investment bank Clear Street described these agreements as "transformational agreements" for TeraWulf in its latest research report, "significantly enhancing its position as a leading provider of hyperscale AI/HPC infrastructure."

The firm noted that project execution and funding still require "close attention," but these agreements "significantly improve visibility into growth and profitability."

JPMorgan believes that CleanSpark (CLSK.US), Riot (RIOT.US), and IREN (IREN.US) may all potentially engage in HPC customer services in the future. The bank lists CleanSpark as its top pick among Bitcoin miners and raised its target price to $15.

While the bank's analysts acknowledge Riot's potential for expanding into HPC services and diversifying revenue beyond cryptocurrency mining, they remain cautious due to uncertainties in the transformation timeline.

JPMorgan upgraded MARA (MARA.US) to "Overweight" in late July, believing its hash rate targets are not fully reflected in the stock price. Although MARA's Q2 adjusted EBITDA increased 10-fold to $808 million, it remains heavily dependent on coin price volatility. The company hopes to tap into the AI computing market, which grows at an annual rate of 25%, through Exaion's HPC data center and cloud service capabilities, reducing the impact of cryptocurrency volatility.

The core driving force behind the strategic transformation boom of mining companies toward AI/HPC infrastructure services lies in seeking profit model diversification—as successfully demonstrated by CoreWeave, Inc., whose post-transformation valuation soared to $48 billion with quarterly revenue exceeding $1.2 billion.

Capital market reactions have been equally positive: TeraWulf's stock price surged 60% in a single day after securing Google's investment. As traditional miners accelerate their transformation into AI computing service providers, whether they can convert infrastructure advantages into sustainable profitability will become the key watershed for companies to navigate cycles.