CoinShares 2026 Report: Have Bitcoin Miners Reached Their Toughest Moment?

Author | James Butterfill

Compiled by | Wu Says Blockchain

TL;DR: Key Points from the Q1 2026 Bitcoin Mining Report

· Profitability Under Extreme Pressure: Q4 2025 became the most challenging quarter since the halving, with the combined effects of price corrections and high hash rates causing hash price to fall below $30/PH/day, reaching a five-year low, leading to approximately 15-20% of older mining machines in the network operating at a loss.

· Acceleration of AI Transformation: Publicly listed mining companies have announced over $70 billion in AI/HPC contracts. The capital market is giving a high premium to AI narratives (valuation multiples reaching 12.3 times), and the industry is rapidly differentiating into "infrastructure providers" and "pure mining companies."

· Brief Hash Rate Retreat: Due to profit pressure, winter power restrictions, and regulatory inspections, the total network hash rate retreated about 10% from its peak in Q4, but models predict the industry remains resilient, with the total hash rate rebounding to 1.8 ZH/s by the end of 2026.

· Restructuring of Costs and Debt: AI construction has led some hybrid mining companies (like CIFR, WULF) to see their average BTC production costs surge and accumulate significant debt; in contrast, low-leverage miners like CLSK and HIVE have demonstrated strong financial discipline and pure mining cost advantages.

· Core Conclusion: The mining industry is undergoing a deep structural reorganization. If the BTC price does not rebound above $100,000 in 2026, high-cost miners will accelerate their exit (miner capitulation), while operators with extreme energy cost advantages or successful AI crossovers will dominate future capital markets.

I. Executive Summary

Q4 2025 was the most difficult quarter for Bitcoin miners since the halving in April 2024. The significant price correction of Bitcoin (falling from about $124,500 at the beginning of October to about $86,000 at the end of December, a decline of about 31%), combined with hash rates near historical highs, compressed hash prices to their lowest point in five years.

In Q4 2025, the weighted average cash cost for publicly listed miners to mine a single Bitcoin rose to about $79,995.

This quarter highlighted three core themes:

Profitability Under Pressure: Hash price dropped to about $36-38/PH/s/day, nearing or at breakeven for many miners. Three consecutive mining difficulty reductions (the first consecutive reductions since July 2022) marked "miner capitulation." Entering Q1, hash prices further plummeted to $29/PH/s/day, indicating miners would face more pain.

Accelerated AI/HPC Transformation: The differentiation between pure mining companies and infrastructure companies transitioning to AI has intensified. Currently, the entire publicly listed mining sector has announced over $70 billion in AI/HPC contracts. WULF, CORZ, CIFR, and HUT are effectively evolving into data center operators that also mine Bitcoin.

Restructuring of Capital Structures: Several mining companies have taken on significant debt to fund AI infrastructure construction. IREN currently carries $3.7 billion in convertible notes; WULF's total debt reaches $5.7 billion; CIFR issued $1.7 billion in senior secured notes. The industry's overall leverage has fundamentally altered its risk profile.

II. Competition for Rack Space Between AI and Bitcoin Mining

AI is continuously competing for rack space in many data centers, which may drive Bitcoin mining towards more intermittent and cheaper power sources in the long run.

The migration of Bitcoin miners to AI and high-performance computing (HPC) is rapidly accelerating. According to recent company announcements, by the end of this year, publicly listed mining companies may derive up to 70% of their revenue from AI, up from about 30% currently. Initially a marginal diversification strategy, it is increasingly becoming their core business.

During 2025 and early 2026, Bitcoin mining companies signed multiple GPU co-location and cloud service agreements with hyperscalers, totaling over $70 billion. Although most agreements plan for new data centers, there is still a high likelihood of business cannibalization and shutdown of existing mining facilities. Therefore, as the capacity agreed upon in these contracts gradually ramps up, the share of Bitcoin mining in the revenue of these operators will significantly decline throughout 2026.

This shift is largely driven by economic considerations. Hash prices remain near cyclical lows, compressing mining profit margins, while AI infrastructure structurally offers higher and more stable returns. In this context, reallocating power and capital to high-performance computing (HPC) makes a lot of sense, especially for operators with scalable energy and existing data center capabilities.

However, this transformation is not uniform. Some miners, like IREN and Bitfarms, are actively repositioning themselves as HPC providers, effectively using mining as a bridge into AI infrastructure. Others, like CleanSpark, continue to prioritize mining operations in the short term, monetizing recently developed capacity while gradually expanding their footprint in AI.

A third group remains committed to Bitcoin mining but is evolving in their operational approach. These operators are no longer pursuing large-scale facilities but are focusing on the lowest-cost and often intermittent energy sources, such as stranded renewables or flare gas. For example, Marathon has deployed smaller, localized containerized sites of about 10 megawatts at the edge of energy networks. This configuration is well-suited for mining operations that can tolerate power interruptions but is incompatible with AI workloads that require nearly continuous operation.

Load balancing is likely to remain a persistent niche within the mining sector. By providing demand-side flexibility to grids like ERCOT in Texas, miners can secure better electricity prices. The importance of this role may increase, although over time it may attract smaller and more specialized operators.

A key unresolved question is how sustainable this AI-driven transformation will be. While the current economic conditions heavily favor AI, mining operations remain highly sensitive to Bitcoin prices. If mining profitability sees a substantial recovery, some operators may reassess capital allocation between the two businesses. In this sense, the current trend may not represent a permanent transformation but rather a result of relative return dynamics.

In the long run, this may mean that the group of pure mining companies will shrink, while hybrid infrastructure companies that straddle both mining and AI will become more widespread. Meanwhile, new entrants may emerge to develop the niches vacated by legacy companies, especially in energy-constrained or highly flexible market segments.

The cost difference between Bitcoin mining infrastructure (approximately $700,000 to $1 million per megawatt) and AI infrastructure (approximately $8 million to $15 million per megawatt) is significant, and this conversion opportunity is currently being massively monetized:

CORZ: Approximately 350 megawatts of high-performance computing (HPC) are powered, with about 200 megawatts being billed. The contract with CoreWeave expands to $10.2 billion over 12 years. The goal is to achieve full production of 590 megawatts by early 2027.

WULF: The Lake Mariner site has 39 megawatts of critical IT capacity online. Signed HPC total revenue reaches $12.8 billion. Other facilities are progressing as planned before Q4 2026. The platform will expand to five locations, with a total capacity of about 2.9 gigawatts (GW).

CIFR: Collaborating with Fortress Credit Advisors to develop the 300-megawatt Barber Lake site. A multi-billion dollar Fluidstack agreement (backed by Google) has been reached. No revenue has been generated yet.

IREN: The scale has expanded to over 10,900 NVIDIA GPUs. The Childress Horizon phases 1-4 expansion project (up to 200 megawatts of liquid-cooled GPUs). AI cloud service revenue reached $17.3 million in Q4.

HUT: Signed a $7 billion, 15-year lease agreement for 245 megawatts with Fluidstack at the River Bend site in Louisiana, with the first data hall scheduled to go live in early 2027.

The failure of the merger between CORZ and CoreWeave (rejected by shareholders on October 30, 2025) highlights the tension between infrastructure value and equity value. Due to improper capitalization of assets committed for removal during the HPC transition, CORZ subsequently restated its financial data, indicating the complexity of its accounting treatment.

Revenue Contribution is Still in Early Stages but Growing: AI/HPC data centers hosted by CORZ accounted for 39% of its Q4 revenue; WULF's HPC business accounted for 27%; IREN's AI cloud business accounted for 9%; HIVE's HPC business accounted for 5%. While mining operations still dominate, it is evident that AI's revenue contribution will continue to grow significantly.

III. Total Network Hash Rate

In late August 2025, the Bitcoin network reached a significant milestone, with hash rate exceeding 1 ZH/s for the first time. By early October, the total network hash rate peaked at about 1,160 EH/s.

However, a significant reversal occurred in Q4. The total network hash rate fell about 10% from the peak in October, dropping to about 1,045 EH/s by the end of December (and further dipping to 850 EH/s in early February before rebounding), accompanied by three consecutive mining difficulty reductions, marking the first consecutive reductions since July 2022. This was primarily driven by the following factors:

The BTC price correction caused older mining machines from the S19 era to fall below breakeven (the breakeven electricity price for S19 XP dropped from about $0.12/kWh in December 2024 to about $0.077/kWh in December 2025).

Increased winter energy costs and ERCOT's curtailment measures led to a sharp increase in unprofitable mining hours from November to December.

Regulatory actions restarting in Xinjiang, China (the inspections in December 2025 limited mining operations, although this capacity was not permanently displaced).

Despite the short-term decline, the Bitcoin network still added about 300 EH/s of hash rate throughout 2025. As of the time of writing, the total network hash rate has remained roughly at the level of the end of 2025, around 1,020 EH/s. Although the recent hash rate retreat may seem concerning, viewing it on a logarithmic scale shows that its severity is far less than the mining ban in China in 2021. This is more a result of cyclical and weather factors rather than indicating that the industry is facing a more severe crisis. The subsequent strong rebound in hash rate also highlights that many miners still view mining as an economically viable business activity.

According to our previously detailed piecewise prediction model, we currently expect the total network hash rate to reach 1.8 Zetahash (ZH/s) by the end of 2026, and to reach 2 Zetahash (ZH/s) by the end of March 2027, which is a month later than previous forecasts.

Geographic Shift of Hash Rate: The top three countries (the United States, China, and Russia) control about 68% of the global hash rate. The U.S. market share increased by about 2 percentage points quarter-over-quarter. Emerging markets like Paraguay, Ethiopia, and Oman have successfully entered the global top ten, driven by miners like HIVE (300 megawatt project in Paraguay) and BTDR (40 megawatt project in Ethiopia).

IV. Hash Price Dynamics

Hash price (the metric determining miner revenue per unit of hash rate) peaked at about $63/PH/s/day in July 2025 and continued to decline throughout Q4. By November, it had dropped to about $35-37/PH/s/day, setting a five-year low at that time. It briefly rebounded to about $38-40 at the end of December and early January, but this was short-lived, as hash price further collapsed entering Q1 2026, falling to about $28-30/PH/s/day, marking a new historical low since the halving.

This decline was caused by multiple overlapping factors: record-high mining difficulty (which peaked at 155.97T after a 6.31% increase on October 29), sluggish Bitcoin prices (down about 31% from the historical high in October), and extremely low transaction fee income (remaining below 1% of total block rewards, with an average fee of about 0.018 BTC per block).

This created the harshest profit environment since the April 2024 halving. With an average industrial electricity price of $0.05/kWh (S19 XP at $0.077/kWh), miners operating next-generation machines (like the S19j Pro with an efficiency ratio of about 29.5 J/TH) were operating well below breakeven by the end of the year, and the situation further deteriorated entering 2026.

Latest Forecast: The deterioration of the hash price environment has exceeded our previous expectations, briefly touching about $28/PH/s/day in late February, and as of writing, it has rebounded to about $30-35. At current levels, miners operating next-generation machines need to secure electricity prices below $0.05/kWh to maintain cash profitability, while the latest generation models (with efficiency ratios below 15 J/TH) can still maintain substantial profit margins at typical industrial electricity prices. For hash prices to sustainably rise above $40, Bitcoin prices need to rebound to over $100,000 by the end of the year, and the price increase must outpace the continued growth of total network hash rate.

Unless Bitcoin prices see a substantial rebound, we expect high-cost operators to face further "miner capitulation" in the first half of 2026. The current mining economic conditions are insufficient to stimulate a large-scale hardware upgrade cycle. Hash prices must first decline further, forcing enough old capacity and operators to shut down, thereby reducing total network hash rate and mining difficulty, which would provide an entry point for new Bitcoin miners or sufficient incentive for upgrades of existing operational nodes. However, despite the relentless squeeze on profit margins, total network hash rate continues to show remarkable resilience. This may be supported by multiple factors: including state-backed mining activities that are strategically rather than purely economically motivated; operators able to access extremely cheap or stranded power; and ASIC manufacturers connecting unsold inventory to their own facilities to maintain their order commitments with foundries like TSMC and Samsung.

The pain in the mining industry has triggered massive sell-offs and capitulations among miners. Publicly listed miners have cumulatively reduced their BTC treasury holdings by over 15,000 coins from their peak, with Core Scientific alone selling about 1,900 BTC (approximately $175 million) in January and planning to liquidate nearly all remaining holdings in Q1 2026; Bitdeer zeroed out its treasury in February; Riot sold 1,818 BTC (approximately $162 million) in December 2025.

We believe that assuming Bitcoin prices rebound to the $100,000 mark is not unrealistic; if that price level is reached, hash prices would rise to $37/PH/s/day. If prices linger below $80,000 for the remainder of this year, and assuming mining difficulty continues to rise, we predict hash prices will continue to decline. However, in this scenario, the actual trajectory may differ: as miners shut down unprofitable machines, total network hash rate may further decline, making hash prices more likely to stabilize. If we see prices begin to test the historical high of $126,000, hash prices could soar to $59/PH/s/day.

The decline in hash prices has far exceeded our forecast range, although we believe this is a temporary phenomenon triggered by the recent price drop and expect it to gradually stabilize in the range of $30 to $40/PH/day.

Current hash prices have made it unprofitable to continue operating many mining machines. At the current hash price level of $30/PH/day, any machines performing below the S19 XP and facing electricity prices of $0.06/kWh (6 cents/kWh) or higher are operating at a loss — we estimate that this portion of equipment accounts for about 15% to 20% of the global active mining fleet.

V. Mining Cost Analysis

1. Overview

The table below shows the detailed cost per BTC for all mining companies included in the study for Q4 2025. All data is priced in USD for mining a single BTC and uses the revenue-share methodology described in the appendix to allocate relevant costs to self-mining operations.

Core Observations:

AI/HPC construction is distorting the per-BTC cost metrics of hybrid operators. The debt, selling, general and administrative expenses (SG&A), and depreciation and amortization (D&A) associated with AI infrastructure construction are being allocated to a shrinking BTC production base, thus inflating the apparent per-BTC cost (headline cost-per-BTC) data. For companies like WULF, CORZ, and CIFR, their all-in costs increasingly reflect the economic conditions of transitioning to data center operators rather than purely Bitcoin mining economics.

Electricity costs across the industry have seen a substantial increase compared to Q2 2025. This reflects the increased mining difficulty diluting BTC production, rising winter energy costs, and falling BTC prices.

Depreciation and amortization (D&A) is the largest non-cash cost component, with significant variation due to differing depreciation policies among companies. MARA's $136,000/BTC and CIFR's $88,000/BTC are outliers (due to MARA's large fleet of mining machines; CIFR uses a three-year useful life assumption for depreciation).

Stock-based compensation (SBC) remains an important differentiating factor. HUT's $48,500/BTC (primarily a one-time award to the CEO/CSO) and CORZ's $35,500/BTC are outliers. BTDR ($3,900/BTC) and CLSK ($6,700/BTC) exhibit the strictest financial discipline.

Interest costs are currently significantly impacting several mining companies. WULF ($145,000/BTC), CIFR ($56,000/BTC), and BTDR ($16,000/BTC) carry substantial debt. In contrast, HIVE ($320/BTC) and CLSK ($830/BTC) have very low leverage, providing significant structural advantages.

2. Company Details

MARA (MARA Holdings)

BTC Produced: 2,011

All-In Cost: $153,040/BTC

Cash Cost (Pre-Tax): $103,605/BTC

In Q4, MARA produced 2,011 BTC, remaining the largest publicly listed miner by output. As of the end of December, the company's energized hash rate reached 53.2 EH/s (a 15% increase this quarter), but due to rising network difficulty, the daily average output dropped to about 21.9 BTC, lower than in previous quarters.

Its electricity cost was $64,703/BTC, which is average among peers, reflecting its geographic diversity and high reliance on third-party hosting (of the total electricity cost of $130.1 million, third-party hosting accounted for $79.4 million). Its D&A reached $136,166/BTC, the highest among peers, reflecting its large fleet of mining machines (total annual D&A of $772.8 million).

The apparent all-in cost was severely distorted by a $183.4 million income tax benefit, stemming from a fair value adjustment of BTC holdings under ASU 2023-08 accounting standards. Excluding this non-operating income, the all-in cost surged to $240,407. In Q4, MARA maintained its "HODL" strategy and did not sell BTC, keeping 7,377 BTC in third-party lending arrangements. However, the company began softening this stance in Q3 2025, allowing the sale of newly mined BTC to fund operations. In the 10-K filed on March 2, 2026, MARA further expanded this policy, authorizing the sale of all 53,822 BTC reserves on its balance sheet. This shift was partly due to pressure on its $350 million Bitcoin collateralized credit line — as BTC fell to $68,000 in early 2026, the loan-to-value (LTV) ratio rose to about 87%. This marks a substantial deviation from its comprehensive HODL strategy adopted in July 2024.

Additionally, the company announced a partnership with Starwood Capital in AI and HPC data centers and acquired a 64% stake in Exaion for $174.5 million in February 2026, indicating its acceleration into diversification beyond pure mining.

IREN (IREN Limited)

BTC Produced: 1,664

All-In Cost: $140,441/BTC

Cash Cost: $58,462/BTC

Thanks to favorable electricity agreements at the Childress facility in Texas and $1.8 million in demand response revenue in Q4, IREN achieved the lowest electricity cost per BTC at just $34,325. Its installed hash rate reached 46 EH/s, with a fleet efficiency ratio of about 15 W/T.

Its stock-based compensation (SBC) was $31,717/BTC, ranking second among peers (Q4 SBC was $58.2 million, surging 7.3 times year-over-year, primarily driven by options with a $75 exercise price and a large number of restricted stock units (RSUs) vesting). The payroll taxes associated with SBC added $6.8 million to actual cash costs. D&A nearly doubled year-over-year to $99.2 million, reflecting the expansion of the Childress project.

IREN carries a total of $3.7 billion in convertible notes divided into five series (2029-2033), the heaviest debt burden among peers, although its interest expenses remain manageable due to low coupon rates (2.75%-3.50%). The $111.8 million debt conversion inducement fee (non-cash) and $182.5 million deferred tax benefit were excluded from the cost analysis. Its AI cloud service revenue reached $17.3 million (accounting for 9% of total revenue), while the Horizon phases 1-4 GPU expansion project (up to 200 megawatts) is under construction.

CLSK (CleanSpark)

BTC Produced: 1,821

All-In Cost: $118,932/BTC

Cash Cost (Pre-Tax): $71,188/BTC

CleanSpark has demonstrated exceptional operational discipline. Its SG&A was $17,848/BTC, and SBC was $6,662/BTC, among the lowest in the industry. A 100% allocation ratio (pure mining, no hosting/HPC revenue) simplifies cost analysis.

Electricity costs were $52,463/BTC, up from Q2 ($44,679), reflecting increased mining difficulty. With an installed capacity of about 50 EH/s, the fleet's efficiency ratio of about 16 W/T remains industry-leading. D&A was $58,381/BTC, roughly in line with peers. Interest expenses were very low ($830/BTC), reflecting its low-leverage balance sheet.

New CEO Matt Schultz (who took over from Zach Bradford in August 2025) stated that if market conditions allow, hash rate could rise to about 60 EH/s. The company is exploring diversification of equipment suppliers to reduce reliance on Bitmain. No explicit AI/HPC plans have been announced yet, although management hinted at monetizing data center assets near metropolitan areas (Georgia facility). Note: CLSK's fiscal year ends on September 30, meaning current data belongs to its Q1 2026.

RIOT (Riot Platforms)

BTC Produced: 1,324

All-In Cost: $170,366/BTC

Cash Cost (Pre-Tax): $102,538/BTC

Riot produced 1,324 BTC, with an average deployed hash rate of 31.5 EH/s. The $9.9 million ERCOT demand response credit in Q4 (totaling $56.7 million for the fiscal year) significantly benefited its electricity cost of $49,196/BTC, effectively offsetting total electricity costs.

SG&A reached $31,534/BTC, among the highest in the industry, reflecting corporate management expenses and development expenditures for the 1 GW Corsicana project. SBC reached $21,586/BTC, at a high level. D&A was $66,900/BTC, reflecting ongoing investments in mining machines. As of December 31, the company held 17,722 BTC (valued at over $1.5 billion at the end of the period).

Riot's strategic focus is on the Corsicana project, of which 600 megawatts have been designated for AI workloads. Although this represents a significant long-term opportunity, the majority of Q4 revenue was still driven by mining operations. The 1 GW total site capacity makes Riot one of the largest single-site operators in North America.

CORZ (Core Scientific)

BTC Produced: 421

All-In Cost: $168,693/BTC

Cash Cost: $110,282/BTC

Q4 marked a milestone for CORZ in its transition to AI/HPC. Hosting revenue reached $31.3 million (accounting for 39% of total revenue, up from $8.5 million in Q4 2024). Due to capacity being intentionally shifted to the HPC sector, self-mining revenue fell year-over-year from $79.9 million to $42.2 million.

The lower BTC production (421 BTC) inflated the metrics per BTC. SG&A was $47,510/BTC, and SBC was $35,506/BTC, both the highest among peers, reflecting corporate management expenses and costs associated with the failed CoreWeave merger. The fleet efficiency ratio of about 24.7 W/T lagged behind peers (15-18 W/T), leading to electricity costs of $66,720/BTC.

The failed CoreWeave merger (October 30, 2025) brought uncertainty, but execution work continues: about 350 megawatts are powered, with about 200 megawatts being billed, aiming for full production of 590 megawatts by early 2027 (with a contract value of $10.2 billion over 12 years). Due to improper capitalization of assets committed for removal during the HPC transition, the company made significant restatements of its financial data for 2024-2025, leading to a change of auditors to KPMG and a determination of internal controls as ineffective. D&A was $17,701/BTC, the lowest among peers, reflecting asset impairment after restatement.

WULF (TeraWulf)

BTC Produced: 262

All-In Cost: $471,841/BTC

Cash Cost: $384,517/BTC

Important Note: WULF's per-BTC cost data is not comparable to pure mining peers.

The company has fundamentally transformed into an AI/HPC infrastructure business, maintaining only a dwindling mining operation. The 262 BTC mined this quarter was generated alongside $9.7 million in HPC leasing revenue.

Q4 mining revenue fell 40% quarter-over-quarter to $26.1 million. HPC leasing revenue grew 35% quarter-over-quarter to $9.7 million (accounting for 27% of total revenue in Q4). Total revenue for fiscal year 2025 was $168.5 million, with HPC business contributing $16.9 million.

The extremely high all-in cost reflects the following factors: interest of $144,974/BTC (total debt of $5.7 billion: including $2.5 billion in convertible notes and $3.2 billion in senior secured notes under WULF Compute); SG&A of $167,221/BTC (primarily due to workforce expansion and milestone compensation); D&A of $77,217/BTC (new HPC infrastructure). By the end of 2025, the company had cash reserves of $3.7 billion (up from $274 million), reflecting massive capital formation. It has signed contracts for 522 megawatts of capacity, involving $12.8 billion in long-term customer contracts.

CIFR (Cipher Digital)

BTC Produced: 591

All-In Cost: $231,980/BTC

Cash Cost: $103,516/BTC

CIFR's all-in cost ranks second highest (excluding WULF), primarily driven by D&A of up to $87,768/BTC (based on a three-year useful life assumption adopted in 2024) and interest expenses of $56,445/BTC.

The surge in interest was a defining feature of CIFR's Q4: it issued $1.733 billion in senior secured notes at a 7.125% interest rate in November 2025, leading to a spike in interest expenses to $33.4 million in Q4, while total interest for the first nine months was only $3.2 million. Electricity costs were $41,047/BTC, highly competitive (the power purchase agreement at the Odessa site is about $0.028/kWh). SBC reached $40,695/BTC, at a high level, categorized under "compensation and benefits" rather than SG&A (this reporting method is unusual).

Significant asset impairments in Q4 (Odessa mining machine impairment of $45.3 million, Black Pearl impairment of $96.1 million, asset disposal losses of $29.4 million) were excluded from the cost analysis. The company changed its name to Cipher Digital Inc. on February 20, 2026. In high-performance computing (HPC), the 300-megawatt Barber Lake site (in partnership with Fortress) and the Fluidstack agreement (backed by Google) lay the foundation for CIFR's diversification, although no revenue has been generated yet.

HUT (Hut 8 Corp.)

BTC Produced: 719

All-In Cost: $160,402/BTC

Cash Cost: $50,332/BTC

Hut 8's apparent all-in cost seems competitive, but caution is warranted due to several one-time items.

Its SBC is as high as $48,527/BTC, the highest among peers, primarily driven by equity awards (2.3 million RSUs and performance stock units) granted to the CEO and CSO in November 2025. Q4 SBC was $39.7 million, while the total for the first nine months was only $18.1 million — reaching a ratio of 2.2 times. Normalizing SBC would significantly lower its all-in cost.

The $17.8 million Canadian harmonized sales tax (HST) refund received in December 2025 makes its $7,413/BTC general and administrative expenses (G&A, excluding SBC) artificially low. Normalized G&A should be closer to about $30,000/BTC. The $48,621/BTC D&A is data at the consolidated level; the D&A related to mining is actually lower (as about 74% of property, plant, and equipment (PP&E) is related to mining). Interest expenses of $6,840/BTC reflect its total debt of about $411 million (including TZRC debt at 15.25% interest, Coinbase debt at 9%, and Coatue convertible bonds at 8%).

Thanks to Bitmain mining machines at the Vega site (with a hash rate of 14.86 EH/s), its BTC output rose from 578 BTC in Q3 to 719 BTC. The company currently holds 15,679 BTC (valued at about $1.37 billion). Its complex business structure (including four business segments, ABTC subsidiary, and intercompany offsets) makes clear cost attribution challenging. The $78.2 million income tax benefit (deferred tax reversal) in Q4 has been excluded from calculations.

BTDR (Bitdeer Technologies Group)

BTC Produced: 1,673

All-In Cost: $118,188/BTC

Cash Cost: $87,144/BTC

Bitdeer's all-in cost is highly competitive among peers, although this partly reflects IFRS practices and multi-segment revenue (SEALMINER mining machine sales revenue of $23.4 million, HPC/AI revenue of $2.3 million). Average electricity costs rose from $43 per megawatt-hour in Q3 to $46 per megawatt-hour.

The most notable issue is the change in depreciation policy in Q4: management shortened the useful life of mining machines, causing D&A in the cost of self-mining revenue (CoR) to double quarter-over-quarter (from $31.2 million to $63.9 million), despite hash rate growing by about 60%. The gross margin for self-mining plummeted from 27.7% in Q3 to 3.6%. This is purely an accounting treatment result, not a deterioration in operational conditions.

Under IFRS reporting, D&A and SBC are bundled in the cost of revenue (CoR), complicating comparisons with peers using U.S. GAAP. Interest expenses of $16,306/BTC reflect about $1 billion in convertible notes and related party loans. BTDR's proprietary ASIC chip strategy (with efficiency ratios of 16.5 W/T for SEALMINER A2 and an upcoming 9.7 W/T A3) is a significant competitive advantage, greatly reducing capital expenditures per TH of hash rate compared to purchasing Bitmain mining machines.

HIVE (HIVE Digital Technologies)

BTC Produced: 884

All-In Cost: $144,321/BTC

Cash Cost: $75,274/BTC

HIVE mined 884 BTC in Q4 (its third fiscal quarter ending December 31), achieving significant output growth driven by its expansion in Paraguay. The fleet efficiency ratio improved from 21 W/T to 18.5 W/T.

The electricity cost of $65,368/BTC is the highest among peers (excluding WULF), driven up by a forward-looking accounting change: HIVE capitalized $41.3 million in non-refundable Paraguayan VAT into property, plant, and equipment (PP&E) and expensed $5.5 million in electricity VAT through operating expenses (opex). This accounting treatment simultaneously inflated its D&A and electricity costs compared to peers.

Its SG&A of $9,054/BTC ranks among the lowest. SBC of $7,501/BTC is moderate (corresponding to RSUs issued at CAD 7.30 in October 2025). Interest expenses were only $320/BTC, the lowest among peers — HIVE's total debt is only $13.8 million, providing significant structural advantages. During the quarter, the 100-megawatt Valenzuela facility became operational; HIVE currently has a total of 300 megawatts under ANDE power purchase agreements in Paraguay.

The company faces about $79.2 million in contingent VAT liabilities (stemming from assessments by the Swedish Tax Agency against its Bikupa subsidiary, currently in the court appeal stage). It uses 2,079 BTC with buyback options to pay equipment deposits, an unusual capital management strategy.

BITF (Bitfarms)

Will be updated after Bitfarms releases its Q4 financial report.

VI. Mining Company Stock Performance and Valuation

In Q4, the valuation premium for AI/HPC continued to expand. Currently, mining companies with HPC contracts have an enterprise value to next twelve months sales (EV/NTM sales) multiple of 12.3 times, while pure mining companies have a multiple of only 5.9 times. The decline in BTC prices in Q4 (down 31% from historical highs) created dual pressures: it not only reduced mining revenue but also significantly diminished the value of BTC holdings in miners' treasuries.

The valuation discount for CORZ following the failed merger (possibly due to hedge fund liquidations) sharply contrasts with the valuation premiums enjoyed by WULF, CIFR, and HUT. Currently, the entire sector's short interest is at high levels; as of writing, MARA's short interest accounts for about 30% of its float.

The industry has fundamentally differentiated into "infrastructure companies" (like WULF, CORZ, CIFR, HUT) and "mining companies" (like MARA, CLSK, RIOT, HIVE). Whether these AI-driven high valuation multiples are justified ultimately depends on the execution capabilities of the companies: not all announced agreements can be converted into operational infrastructure, and the capital demands behind them remain enormous.

VII. Q1 2026 and Future Outlook

1. The Recovery of Hash Prices Depends on BTC Prices: With BTC prices around $70,000 and hash prices around $30/PH/day, many mid-generation mining fleets are at or below breakeven. If prices remain below $70,000, it could trigger larger-scale "miner capitulation," but this would conversely benefit survivors by lowering mining difficulty and total network hash rate.

2. Deployment of New Generation Hardware: The Bitmain S23 series and SEALMINER A3 (both with efficiency ratios below 10 J/TH) are expected to achieve large-scale deployment in the first half of 2026, further widening the efficiency gap and accelerating the upgrade cycle of mining fleets.

3. Turning Point for AI/HPC Revenue: CORZ aims to fully deliver the 590-megawatt CoreWeave project by early 2027. The expansion of WULF's Lake Mariner site is ongoing. The market will closely watch whether contracted revenues can convert into actual billing and whether profit margins can reach the target of over 85%.

4. Leverage Differentiation Creates M&A Catalysts: Mining companies with healthy balance sheets and good liquidity (like HIVE, CLSK) are likely to become acquirers, although even CLSK has taken on a significant amount of convertible debt ($1.15 billion at zero interest) to fund its transition to AI infrastructure.

5. Geographic Distribution and Regulatory Environment Changes: The U.S. continues to expand its market share. Paraguay and Ethiopia are emerging as new mining hubs. Law enforcement actions in Xinjiang, China, may prompt hash rate to shift overseas. Texas SB 6 legislation (signed in June 2025) imposes new requirements on large mining and data center power loads connecting to ERCOT, including mandatory remote shutdown capabilities.

6. Industry Consolidation: We expect more M&A activity in 2026. The efficiency gap between top-tier fleets (with efficiency ratios around 15 W/T) and lagging fleets (with efficiency ratios above about 25 W/T) has become large enough that directly acquiring efficient capacity may be cheaper than upgrading outdated operational facilities.

Appendix: Methodology

Denominator: The number of BTC produced from self-mining this quarter.

Allocation Ratio: Self-mining revenue / Total revenue. This ratio is applied to SG&A, D&A, SBC, interest, and taxes.

All-In Cost per BTC = Electricity Cost (after curtailment compensation) + SG&A (excluding SBC) + D&A + Net Interest + Income Tax + SBC — all items are allocated based on the proportion of mining revenue.

Cash Cost per BTC = Cost of Revenue (excluding D&A) + SG&A (excluding SBC) + Net Interest + Income Tax — all items are allocated proportionately.

Electricity Cost: After deducting curtailment/demand response credits. This cost analysis excludes asset impairments, fair value revaluations, and non-operating items (e.g., BTC revaluation gains/losses, derivative fair value changes, debt conversion inducement fees).

Numerical Units: Unless otherwise specified, all figures are in thousands of dollars. Non-USD denominated financial report data has been converted at the average quarterly exchange rate.