According to investment giant VanEck, Bitcoin miners' debts have risen from $2.1 billion to $12.7 billion in only 12 months as they struggle to fulfill demand for artificial intelligence and Bitcoin production.
Without continued investment in the newest machines, a miner's share of the worldwide hash rate deteriorates, leading to a smaller share of Bitcoin (BTC) awarded every day, VanEck analyst Nathan Frankovitz and head of digital assets research Matthew Sigel said Wednesday of their October Bitcoin ChainCheck report.
“We confer with this dynamic because the melting ice cube problem. Historically, miners have relied on the stock market, not debt, to finance these high capital expenditures.”
“This is as a consequence of the undeniable fact that miners' revenue is difficult to secure because it depends almost entirely on the worth of Bitcoin, which is speculative. Importantly, equity tends to be a dearer type of capital than debt,” Frankovitz and Sigel added.
Bitcoin miners' debt has increased from $2.1 billion to $12.7 billion within the last 12 months. Source: VanEck
Industry publication The Miner Mag estimates that combined debt and convertible note offerings from 15 public miners totaled $4.6 billion within the fourth quarter of 2024, $200 million initially of 2025, and $1.5 billion within the second quarter of 2025.
Crypto miners are expanding into AI
A growing variety of Bitcoin miners are diversifying their revenue streams by shifting their energy capability to AI and HPC hosting services after the April 2024 halving slashed mining rewards to three,125 Bitcoin, hurting overall profitability.
“In this fashion, miners have secured more predictable money flows secured by multi-year contracts,” said Frankovitz and Sigel.
“The relative predictability of those money flows has allowed miners to tap debt markets, diversify their income from Bitcoin’s speculative and cyclical prices, and reduce their overall cost of capital.”
In October, Bitfarms accomplished a $588 million convertible debt offering, with proceeds earmarked for HPC and AI infrastructure developments in North America.
Fellow miner TeraWulf also announced a $3.2 billion senior secured note offering to finance a part of its data center expansion at its Lake Mariner campus in Barker, New York.
Meanwhile, IREN also accomplished a $1 billion issuance of convertible notes in October, with among the funds earmarked for general corporate purposes and dealing capital.
AI Pivot poses no threat to the Bitcoin network
Miners are the backbone of the Bitcoin network. They validate and record all Bitcoin transactions in recent blocks. The more miners participate, the upper the hashrate, which contributes to the safety of the network.
Frankovitz and Sigel said that the shift in miners' focus to AI and HPC hosting doesn’t pose a threat to the network's hashrate because “AI's prioritization of electrons is a net profit for Bitcoin.”
“Bitcoin mining stays a simple option to quickly monetize excess electricity in distant or developing energy markets, effectively subsidizing the event of knowledge centers designed for AI and HPC convertibility,” they said.
“In addition, AI inference experiences cyclical demand based on human activity throughout the day.”
Miners are on the lookout for ways to chop costs
At the identical time, several miners the pair spoke to for the report said they’re on the lookout for ways to monetize excess electricity capability when demand for AI services is low.
Frankovitz and Sigel said this might allow miners to offset and even eliminate costly backup power sources similar to diesel generators.
“While this stays conceptual, we consider it represents a logical next step within the unique synergies between Bitcoin and AI, resulting in more efficient use of capital, each financial and electrical.”
