According to a report, as Bitcoin prices remain persistently low, analysts point out that leading mining companies, represented by Cipher Digital (CIFR.US), are accelerating their shift toward AI data center operations. They aim to hedge against the risk of losses in mining by signing stable contracts lasting 10 to 20 years.

Hut 8 (HUT.US) stands out as one of the most thorough examples of this transformation. By the end of June, its contracted AI data center capacity reached 949 MW, corresponding to a base contract value of approximately $26.6 billion. Once fully operational, it is expected to generate an average annual net operating income of over $1.75 billion.

Bitdeer (BTDR.US) also signed a $4.7 billion AI leasing contract in Norway in early August, providing 121 MW of computing power capacity to Anthropic, with an estimated annual revenue of about $290 million.

In contrast, the profitability of mining operations has come under severe pressure. Cipher Digital (CIFR.US) reported interest expenses of $66.7 million in the second quarter, while mining revenue was only $24.8 million, a ratio of nearly 2.7 to 1. Despite selling 1,619 BTC for $120 million in the first half of the year, the company still posted a loss of $47.7 million.

Hyperscale Data (GPUS.US), to support its AI business, sold over 150 BTC in a single week recently, cashing out approximately $9.6 million.

Data compiled by the report indicates that this collective shift from mining to AI computing power leasing is fundamentally driven by mining companies' desperate need for stable, long-term cash flows amid extreme profit pressure. However, the transition is fraught with challenges, including capital mismatches, high financing costs, and regulatory and audit hurdles.

In early August, the Texas governor ordered an audit of all pending data center projects. Analysts at Bernstein pointed out that this move will curb speculative development and compress the supply of new electricity, thereby increasing the scarcity value of already approved power capacity. Cipher Digital (CIFR.US) has been significantly impacted due to its expansion plans' heavy reliance on Texas grid access.

Meanwhile, in June, the Federal Energy Regulatory Commission (FERC) required six regional grid operators to reassess their connection rules for large-load users. This signals a clear direction of tightening regulation, as the grid struggles to accommodate the explosive growth in data center demand.

On the operational front, building AI data centers is far more capital-intensive than mining farms. Bitdeer (BTDR.US) needs to invest $500 million upfront in a single project, creating a significant mismatch between project financing and company cash flow. Although Cipher Digital (CIFR.US) secured $2.84 billion through financing activities in the first half of the year, its core operations cannot even cover interest payments. Selling Bitcoin incurs losses, issuing shares dilutes value, and issuing bonds incurs interest costs鈥攅ach financing path comes with a price.

For mining companies that base their future revenue on "pending approval" electricity capacity, regulatory uncertainty poses a substantial potential risk. In the long run, only those firms that already have energized substations and signed tenants are likely to successfully complete the transition. Companies whose valuations rely solely on data from PowerPoint slides will likely face a market re-pricing sooner or later.

Of course, if Bitcoin prices rebound over the next one to two years and AI data center construction experiences a temporary saturation, the industry landscape could once again undergo a dramatic shift. At that point, the survival logic and strategic focus of mining companies will face new tests.