Bitcoin network sees sub-1,000 EH/s hashrate as miners chase AI compute
CryptocurrencyData CentersAI Compute
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Aggressive AI procurement by Meta, Microsoft and other hyperscalers is expanding demand for dense compute beyond traditional data centers, creating a fast-growing commercial outlet for bitcoin miners that retooled sites for GPUs and HPC. Early megawatt-scale contracts (including a reported 300 MW deal) and visible company-level moves — set against a backdrop of falling bitcoin hashrate and ongoing chip and permitting constraints — validate the strategy but leave miners exposed to accelerator supply, local permitting, and power-delivery risks.
Bitcoin’s market value sits materially below modeled all‑in production costs, forcing miners into revenue shortfalls, asset sales and operational curtailments that amplify downward price pressure. At the same time, seven‑day average hashrate has slipped below 1,000 EH/s and some operators are repurposing capacity toward AI/HPC workloads — a shift that both eases near‑term mining economics and introduces execution and monitoring risks.
Bitcoin mining difficulty plunged about 11.16% after Winter Storm Fern forced widespread miner outages in the U.S., the largest one-period drop since China’s 2021 crackdown, as average block times exceeded the protocol’s 10-minute target and Foundry USA briefly lost roughly 60% of its pool hashrate. Broader stressors — seven‑day hashrates slipping below 1,000 EH/s, improving hashprice per unit, miners liquidating holdings and an industry pivot toward AI/HPC — increase the chance of further difficulty reductions (CoinWarz projects ~10.4%) and may accelerate consolidation among mining operators.
Communities in multiple US states are increasingly resisting large, power-intensive AI data center projects, raising questions about long-term grid strain and local costs. Industry tracking shows roughly $64 billion in US data center developments have been delayed or blocked, prompting tech firms to adopt new cost-sharing and community engagement tactics.
Paradigm says Bitcoin mining behaves like a price-responsive electrical load that scales with grid conditions, not a constant consumer. The firm quantifies mining at about 0.23% of global energy use and 0.08% of emissions, and argues mining incentives and halvings limit long-term electricity demand growth.
China is accelerating power capacity, transmission and grid-side firming to remove a major bottleneck for hyperscale AI training — lowering marginal electricity costs and shortening project lead times. That advantage comes with trade-offs: risks of underutilized capacity, supply‑chain distortions, and near‑term emissions consequences that complicate geopolitics and climate commitments.
JPMorgan’s model places bitcoin’s all‑in production cost near $77,000 after network hashrate and difficulty eased this year, but early signs of hashrate recovery and efficient miners scaling into vacated capacity point to higher difficulty and costs ahead. Analysts also flagged a January equity rebound for U.S.‑listed miners and growing optionality from AI/HPC conversions, though execution and supply constraints make that an uncertain stabilizer.
Major cloud providers are concentrating purchases of GPUs, high-density DRAM and related components to support AI workloads, creating retail shortages and higher prices that push smaller buyers toward rented compute. Rapid datacenter buildouts, permitting and power constraints, and changes in supplier allocation and financing compound the risk that scarcity will be monetized into long-term service revenue and reduced market choice.