Jackson Hole, Wyoming — Bitcoin mining firms, historically accustomed to the cyclical nature driven by the four-year halving events, are facing a paradigm shift. This was the consensus among leading industry figures at the SALT conference held earlier this week in Jackson Hole.
The rise of Bitcoin ETFs, an increased demand for electricity, and the potential for artificial intelligence (AI) to redefine infrastructure needs are compelling miners to diversify their operations to remain competitive.
“Previously, our discussions centered on hash rate,” stated Matt Schultz, CEO of Cleanspark. “Now, we’re exploring avenues to generate revenue from megawatts.”
For many years, Bitcoin mining businesses, which primarily relied on Bitcoin mining for their earnings, experienced highs and lows dictated by the four-year Bitcoin halving cycle. With each cycle, rewards were reduced by half, causing miners to aggressively reduce expenses or expand to survive. However, according to these executives, this rhythm is no longer the defining factor in the business.
“The conventional four-year cycle is becoming obsolete as Bitcoin evolves into a strategic asset, bolstered by the introduction of ETFs and strategic treasury holdings,” Schultz explained. “Increased adoption is fueling demand. Recent ETF activity has already consumed significantly more Bitcoin than has been mined this year.”
Cleanspark, which currently manages 800 megawatts of power infrastructure and has another 1.2 gigawatts under development, is expanding its focus beyond proof-of-work. “Our agility in bringing electricity to market has unlocked opportunities to monetize power beyond just Bitcoin mining,” he said. “With 33 locations, we now possess significantly more adaptability than ever before.”
A Challenging Business Landscape
Schultz’s perspective on the industry’s substantial business model transformation is not unique.
Patrick Fleury, CFO of Terawulf, concurred, acknowledging the growing pressure on miner profitability.
“Bitcoin mining presents significant challenges,” he stated. He provided a straightforward analysis of Bitcoin mining economics: with electricity costing five cents per kilowatt hour, it currently takes around $60,000 to mine one Bitcoin. With Bitcoin priced at $115,000, energy consumption accounts for half of the revenue. Factoring in corporate and operational costs further reduces profit margins. He believes profitability in mining is largely dependent on securing very low-cost energy.
For Fleury, the fundamental issue goes beyond energy costs; it lies in the continued expansion of the network itself, driven by hardware manufacturers with limited motivation to slow down.
He specifically pointed to Bitmain, which sustains production of mining rigs irrespective of market demand, due to its close relationship with chip manufacturers such as TSMC. Even when miners reduce purchases, Bitmain can deploy these machines internally in regions with extremely cheap power – from the United States to Pakistan – flooding the network with hash power and increasing mining difficulty. Bitmain’s global presence and low production costs enable it to stay profitable, while diminishing profits for others.
Nonetheless, Terawulf is actively adapting. Recently, the company signed a $6.7 billion lease-backed agreement with Google to repurpose hundreds of megawatts of mining infrastructure into data center facilities.
“As everyone here knows, developing electrical infrastructure takes time,” Fleury noted. “The tech industry is used to rapid development and iteration, but these agreements require months of intensive assessment.”
“I am proud of the collaborative approach taken to develop a novel solution that other companies in the industry can hopefully replicate,” he said. “Google is offering $3.2 billion in lease obligation support to Terawulf, effectively enabling me to obtain financing at a very competitive cost of capital.”
Profitability or Patience
Kent Draper, chief commercial officer at IREN, adopted a more reserved yet confident perspective. According to him, the company is currently profitably mining Bitcoin, even in the current market conditions. He emphasized the significance of energy costs.
“Maintaining low production costs is crucial, and we have always prioritized this by maintaining control over our sites, exercising operational control, and operating in jurisdictions with low-cost power,” Draper stated.
Iren is currently operating at 50 exahash, translating to an annualized revenue run rate of a billion dollars, given present Bitcoin market prices. He highlighted that the company’s gross margins, calculated as revenue minus electricity costs, are around 75%. Even after considering overhead and SG&A expenses, IREN maintains a 65% EBITDA margin, equivalent to roughly $650 million in annualized earnings.
Even IREN is currently suspending expansion in mining operations. “This decision is primarily influenced by the opportunities we are seeing in the AI space today and the potential to diversify our revenue streams, rather than a fundamental belief that Bitcoin mining is no longer attractive,” Draper added.
In the AI sector, IREN is exploring both co-location and cloud services. “The capital investment differs significantly,” Draper stated. “Owning the GPUs, in addition to the data center infrastructure, triples the investment. Cloud-based deployments typically offer faster payback periods, often around two years on the GPU investment alone.”
Holding Bitcoin and Maintaining a Strategy
For Marathon Digital (MARA) CFO Salman Khan, maintaining viability depends on adaptability. Drawing on his experience in the oil industry, Khan sees a recurring pattern: expansion, contraction, consolidation, and the continual drive for improved efficiency.
“This scenario resembles trends in cyclical commodity-exposed industries,” Khan observed. “Some families in the oil sector have accumulated substantial wealth, while others have faced bankruptcy. A robust balance sheet is essential for navigating these cycles.”
Marathon holds Bitcoin on its balance sheet, which Khan stated has been beneficial. “We are not a treasury management company, but we like to have that hedge if the Bitcoin price increases significantly.”
Marathon has also recently announced a majority stake in Exaion. “Our strategy in the AI sector focuses on compute at the edge,” Khan explained. “We favor sovereign compute, which enhances data control for users by processing data closer to them. We are also attracted to the recurring revenue streams, software components, and platform aspects.”
Beyond Bitcoin, Behind the Grid
Despite differing viewpoints and strategies, power consumption remains the central factor. Whether used for mining Bitcoin, powering AI applications, or stabilizing electrical grids, energy – not hash rate – emerged as the dominant theme of the discussions.
“We reduce our energy consumption for 120 hours per year,” CleanSpark’s Schultz stated. “This allows us to reduce our total energy costs by approximately one-third. This flexible load capacity is highly valuable.”
Cleanspark, he added, has been quietly securing megawatts across the country. “Take Georgia, for example,” Schultz mentioned. “We have secured 100 megawatts near the Atlanta airport. This exemplifies our strategy of partnering with rural utilities to generate revenue from stranded megawatts.”
Still Centered on Bitcoin – For Now
Despite the increasing focus on AI, the panelists made it clear that Bitcoin remains central to their operations – at present. When asked why mining companies remain attractive to investors, the answers highlighted scale, cost-effectiveness, and the capacity to withstand volatility.
Fleury emphasized that Terawulf’s contracted energy capacity can produce significant cash flow, comparing the financial structure to well-established data center providers. Khan pointed out a disconnect between Marathon’s Bitcoin assets and its market capitalization, suggesting that the core mining business is undervalued. Draper emphasized IREN’s operational effectiveness and low-cost infrastructure, citing recent performance metrics demonstrating the company’s superiority over other publicly traded miners.
While cloud infrastructure and edge computing may play a role in the future, Schultz maintained that Bitcoin itself could evolve into something more substantial, serving as a foundational component for energy systems. According to him, the next stage may focus less on speculation and more on Bitcoin’s potential to contribute to power network stabilization.
Further Reading: Bitcoin Mining Costs Soar as Hashrate Hits Records: TheMinerMag