Bitcoin Miners Face Perfect Storm as Price Plummets and AI Threat Looms

Bitcoin mining companies in the U.S. are feeling the pinch as the cryptocurrency's price takes a tumble. According to a recent report by JP Morgan, the aggregate market capitalization of 14 top U.S. public miners shed 22%—$6 billion—in February alone. The companies tracked by the investment bank include Core Scientific, Greenidge, and MARA Holdings, among others.

Revenue for these companies has also dipped, with analysts at JP Morgan predicting Bitcoin miners earned $54,300 per EH/s on average in daily block reward revenue in February—down 5% from the month before. This decline in revenue comes as Bitcoin's price has dipped 10% over the past 30 days and is currently trading at $87,300.

Mining operations, which require significant electricity consumption, face higher costs when Bitcoin prices drop, making it more expensive to sustain operations. Additionally, investors have been shedding their positions with risk assets, including Bitcoin and equities, due to a trade war with major world economies, including China.

Adding to these pressures, miners with high-performance computing exposure came under pressure following the late January launch of Deepseek, a Chinese AI model. Some Bitcoin miners have repurposed their data centers to support the AI industry to capture tailwinds in AI development. However, the sector saw disruption in January after the Chinese startup unveiled its large language model developed with significantly less capital than U.S. firms such as OpenAI, Microsoft, and Google, weighing on Bitcoin miners diversifying into AI.