Renting one megawatt of power to AI yields twice the returns of mining.

In the third quarter, among nine major mining companies, three now derive more than half of their revenue from non-mining activities, while the rest sold approximately 31,000 Bitcoin to fund their transition.

Author: Blockhead

The financial reports of publicly listed Bitcoin mining companies for Q3 should best be viewed as a price signal. Electricity is being priced at its optimal use, and according to Blockhead's estimates, at current hash rate pricing, leasing the same one megawatt to AI generates roughly twice the revenue compared to using it for Bitcoin mining.

Of the nine companies evaluated in this article, three already generate over half of their revenue from non-mining sources; the others are selling Bitcoin from their balance sheets to fund their transitions.

This development carries two implications. For the mining economy, it shows that profit margins have become so thin that even with high operational efficiency, capital is exiting. For Bitcoin, it means a new class of structural sellers has emerged, and the hash rate base is shifting toward the remaining mine operators.

Two Yield Models for One Megawatt

According to MillionMiner data, the hash rate price (i.e., daily revenue earned per PH/s of hash power) closed at $33.18 in October, down 17.5% from $40.24 on October 1.

MARA, one of the lowest-cost operators, reported a cost of $30.8 per PH/s per day, translating to a profit margin of approximately 7% at the end of October, based on its own metrics.

Based on its earnings call transcript and filing summary, at its self-operated mines, an electricity rate of $0.04/kWh translates to an energy cost of $39,674 per mined Bitcoin, accounting for roughly 55% of its average sale price of $71,688.

Leasing power to AI is a separate business. Announcements from Core Scientific indicate that its billable power capacity stands at 485 MW, corresponding to over $700 million in annualized hosting income, which equates to roughly $1.44 million per MW annually, with an adjusted EBITDA margin of 57%.

Meanwhile, at an energy efficiency of 15 to 20 joules per TH, one megawatt of mining corresponds to 50 to 67 PH/s, generating annual revenues of $600,000 to $800,000 at a $33 hash rate price, before deducting approximately $350,000 in electricity costs (calculated at $0.04/kWh).

Under these depreciation-free assumptions aligned with industry benchmarks, the fee paid by an AI tenant per megawatt is 1.8 to 2.4 times the mining revenue, leaving substantially more after electricity costs are deducted.

In standard AI data center contracts, electricity costs are structured as pass-through expenses, meaning tenants pay for power directly outside the rent. Consequently, the landlord retains nearly the entire rental fee as gross profit, whereas miners must first deduct their electricity bills from fluctuating crypto rewards.

Tenants also cover a portion of construction costs: The 10-Q filing reveals that in the first half of the year, CoreWeave paid $180.9 million toward Core Scientific’s capital expenditures.

The disparity within the same company is also evident. HIVE reported at its earnings call that gross margins for Bitcoin mining stood at 34%, while gross margins for high-performance computing and AI services reached 51%, adding that target EBITDA margins for new GPU clusters are set at 80%.

It also noted in its 8-K quarterly report that declining market values for mining equipment resulted in a $78.7 million GAAP loss driven by a non-cash impairment charge. Falling ASIC prices represent the second signal that mining hardware is undergoing repricing.

Selling Coins to Build AI Data Centers

Another difference lies in the type of revenue. Mining revenue fluctuates with coin prices and network difficulty: a 37% drop in Bitcoin’s average price wiped out $94.8 million from MARA’s quarterly revenue. AI leases, however, span 15 to 20 years.

Core Scientific disclosed in its investor presentation that backlog contract revenues exceed $24 billion, while Cipher stands at $16.6 billion.

Additionally, TeraWulf’s single-campus leases total around $19 billion, and Hut 8’s reach approximately $26.6 billion; according to Rolling Out, despite differing accounting methodologies, their combined figures surpass $85 billion.

Unlike Bitcoin mining—where hardware depreciates to near zero every 3 to 4 years due to difficulty adjustments—the upgraded AI facilities represent infrastructure assets with 15 to 20-year lifespans.

The cost of this upgrade is high capital intensity: converting a facility from Bitcoin mining to AI leasing involves typical high-capex, high-yield infrastructure retrofitting, which essentially requires meeting Tier III data center standards.

As a result, payback periods are longer, but the terminal value of land and power assets is significantly higher. Core’s capital expenditures reached $954.2 million in the first half of the year, while IREN recorded a net loss of $263 million in its fiscal first quarter.

Regardless of what miners do, the Bitcoin protocol issues approximately 450 BTC daily, so exits do not alter the supply. What changes is who holds these coins and who sells them.

According to its shareholder letter, MARA sold a total of 17,488 BTC this quarter—7.8 times its production of 2,247 BTC—and plans to continue selling to finance AI infrastructure and repay note obligations.

Riot sold 10,599 BTC in Q3, while Hut 8 offloaded approximately 3,100 BTC across Q3 and October. Together, these three entities sold roughly 31,000 coins, valued at around $2.4 billion, equivalent to 69 days of new issuance, though reporting windows vary slightly and sales include treasury inventory.

Miners previously sold Bitcoin to cover electricity bills; now they sell it to finance capital expenditures, meaning mining companies' sell pressure is governed simultaneously by funding needs and coin price trends.

Hash Rate Retreats, Risks Shift

Security budgets also draw from the same revenue pool. Miners’ daily income ranged between $34 million and $43 million in October, and by November 2, global hash rate stood at approximately 1069 EH/s, roughly 8% below historical records according to MillionMiner data.

Exits are clearly visible: during its earnings call, Core Scientific revealed its online miner count dropped by nearly 50% compared to the end of 2025; IREN produced 402 BTC that quarter, down from 2,039 a year prior.

Based on Blockhead’s calculations using disclosed figures, mining revenues for Core Scientific, TeraWulf, and IREN combined declined by approximately 84% year-over-year, falling from $334 million to roughly $54 million.

Core expects to complete its exit from Bitcoin operations in Q4 and become a pure hosting provider in 2027. IREN also anticipates having “largely completed” its transition away from Bitcoin mining by the end of 2026.

Remaining operators are expanding their share: MARA’s powered-up hash rate grew by 18%, increasing its block reward share from 5.0% to 5.4%.

This creates a structural consequence. Every megawatt of eligible power now carries an “AI option” reserve price, meaning convertible mining sites will only continue operating when hash rate prices exceed the returns generated by leasing that same amount of power.

This makes the lower bound of hash rate pricing partially a function of AI power demand. Where AI wants power, mining loses it, and the network difficulty adjusts to the remaining capacity. The dollar-denominated security budget still tracks Bitcoin’s price; in MARA’s case, that price is down 37% year-over-year.

This shift exchanges Bitcoin price risk for counterparty and political risk. As Core Scientific’s primary tenant, CoreWeave reported $3.7 billion in revenue, up 168%, with a backlog of approximately $133 billion during its earnings call.

CoreWeave stated it expects to primarily finance remaining expenditures through delayed-draw term loans matched to customer contracts. According to CNBC, its five-year credit default swaps traded near 1,152 basis points on Tuesday, closing at 1,278 basis points by Thursday.

The hosting agreement between Core and CoreWeave covers 590 MW, all funded by CoreWeave.

On the power side, US energy firm NRG stated during its earnings call that ERCOT electricity prices are running nearly 40% below plan. Its 1.2 GW Texas data center project is on schedule, with expected announcements before year-end.

However, according to Averin, NRG’s stock fell 13.5% on November 4 after the Governor-elect of Texas vowed to pause approvals for new data centers.

Analysts adopt a similarly cautious stance. According to 24/7 Wall St., Keefe Bruyette warned of a “lease catalyst shortage” extending into early 2027. Bernstein, citing Texas policy concerns, cut target prices for seven mining stocks by as much as 54%.

Blockhead previously traced the roots of these two factors in August: Wall Street is becoming increasingly picky about which mining firms can actually execute on AI initiatives, while Texas orders data center audits, which Bernstein argues paradoxically increases the value of existing mining companies.

Four metrics warrant close monitoring next. Hash rate pricing against the ~$31 breakeven cost for efficient fleets serves as the first yardstick: below it, more capacity exits and difficulty drops. Second is miner sell-offs, with MARA signaling continued coin sales. Third is the pace of new lease closures. Fourth is financing for tenants and power providers, observable through CoreWeave’s credit spreads and Texas policy developments.

Additionally, CleanSpark’s first earnings report following its switch to quarterly disclosures will provide a clear window into how operators focused solely on Bitcoin mining are faring, warranting ongoing attention.

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