Bitcoin Hit $85,000. Its Miners Would Rather Rent Their Power to AI. | Edition 339

Bitcoin just had its best run in eight months. It closed Monday around $85,100, up more than 30% since mid-August, according to Quartz's roundup of Bloomberg and Wall Street Journal reporting.

You'd expect the companies that mine it to be rushing to plug in more machines. A lot of them are doing the opposite. They're unplugging Bitcoin rigs and renting the same buildings, the same power lines, and the same cooling to AI companies instead.

The reason fits on a napkin: right now, a megawatt of electricity earns roughly three times as much renting to AI as it does mining Bitcoin. This edition walks through that math — and then asks the question that decides where this goes next. What happens if Bitcoin goes to $200,000? Or $300,000?

What a Bitcoin miner actually owns

Strip away the crypto and a Bitcoin mine is a warehouse full of specialized computers turning electricity into lottery tickets. Every ten minutes or so, the network pays a fixed reward — currently 3.125 bitcoin — to whichever machine wins the round. More machines chasing the same prize means each one earns less.

The mining machines themselves are useless for AI; they're built to do exactly one kind of math. But everything around them — hundreds of megawatts of grid power already approved, substations, transformers, cooling, land zoned for industry — is exactly what AI companies are desperate for. As Hut 8 CEO Asher Genoot put it when announcing his company's deal, scaling frontier AI is "at its core, a power challenge."

Why AI outbid Bitcoin

Two things squeezed miners at once. The April 2024 halving cut the block reward in half. Then the price swung hard: Bitcoin peaked around $125,000 in October 2025 and had roughly halved by February. Hashprice — the industry's measure of what a unit of mining power earns per day — sank to a record low near $28 per petahash in early 2026, according to Hashrate Index data.

AI companies, meanwhile, were offering something mining never could: long, fixed contracts paid in dollars. Hut 8's lease runs 15 years, and Google has agreed to cover the payments if the tenant can't. Listed miners now hold more than $100 billion in disclosed AI and high-performance-computing contracts, according to CoinShares' latest mining report — though only about $1.1 billion a year of that is actually being billed so far, because most of the data centers are still being built.

You can see it in the network itself. Bitcoin's total computing power averaged about 1,066 exahashes per second in late 2025 and 1,004 in the first quarter of 2026; by late August its seven-day average sat near 915. Hashrate Index blames most of the early-2026 drop on older machines that stopped paying for themselves when the price fell. But CoinShares expects some mining sites to be shut down and rebuilt for AI as those contracts ramp up — so not all of the computing power that left is coming back.

The napkin math, one megawatt at a time

Here's the comparison, using public numbers and simple assumptions. Real deals vary a lot. The size of the gap is the point.

Mining. A modern mining fleet uses about 20 joules per terahash, so one megawatt runs about 50 petahashes of mining power. In late August, Hashrate Index put mining revenue at about 0.0005 bitcoin per petahash per day. At $85,000 a coin, that's roughly $43 per petahash per day — about $780,000 a year per megawatt. Pay for the electricity at 4 cents a kilowatt-hour (about $350,000 a year) and you keep roughly $430,000.

AI hosting. Hut 8 expects its lease to produce an average of $454 million a year in net operating income, from a site drawing 330 megawatts of utility power. That works out to roughly $1.4 million per megawatt per year — and because the tenant pays the power bill, that's already after electricity.

About three times the money, locked in for 15 years, with Google standing behind it. That's not a hard call. The catch is the build: turning a mine into an AI data center costs far more than a room of mining machines. Up to 85% of Hut 8's construction is expected to be financed by J.P. Morgan and Goldman Sachs, and the first data hall isn't scheduled to come online until the second quarter of 2027.

So what if Bitcoin goes to $200,000? Or $300,000?

Mining revenue moves almost one-for-one with the price. Transaction fees are well under 1% of what miners earn right now, so nearly everything comes from that fixed reward, valued in dollars. Double the price and — until more machines join in — you roughly double what a megawatt earns. Same napkin math, four prices:

Assumes today's mining difficulty, 20 J/TH machines and power at $0.04/kWh. Ignores equipment and construction costs. Illustrative, not a forecast — and not investment advice.

$120,000: the pivot keeps going

Even back at the old high, AI still pays about twice as much per megawatt. Miners that kept some mining running alongside their AI business would enjoy the bump. Nobody tears up a 15-year lease for it.

$200,000: the tie line

Somewhere around $190,000, a megawatt earns about the same either way, and that's when it gets interesting. Sites that haven't signed an AI lease yet suddenly have two bidders. Older mining machines that were switched off become profitable again, so Bitcoin's computing power climbs back up. And AI companies hunting for power find themselves competing with a Bitcoin boom for the same substations.

$300,000: mining wins on paper — for a while

At $300,000 the table says mining earns about 1.7 times the AI lease. But two forces eat that lead fast:

• Everyone plugs back in. Mining is a fixed prize split among everyone competing for it. When the price jumps, machines flood back and each one's slice shrinks. A $300,000 Bitcoin with 50% more computing power on the network pays a megawatt the same as a $200,000 Bitcoin does today.
• The next halving. Around April 2028 the block reward drops again, from 3.125 to 1.5625 bitcoin. At $300,000 and today's difficulty, that cut drags a megawatt back to about $1 million a year — under the AI lease.

And the biggest force doesn't show up in the table at all: the leases already signed don't come back. Hut 8's River Bend megawatts are committed to AI into the early 2040s. Whatever Bitcoin does next, power that has already moved to AI stays there.

What this means for AI

Old Bitcoin sites have become one of the fastest ways to bring new AI computing online, because the slowest part — a big, approved grid connection — already exists. That makes Bitcoin's price a surprising lever on how much AI capacity gets built. A flat or falling Bitcoin pushes more sites toward AI. A soaring one pulls some back, or at least makes the rest more expensive. If you use AI tools every day, it's one more reminder that "cheap, unlimited AI" comes with a power bill somebody has to win.

What this means for Bitcoin

Bitcoin's security comes from how much computing power guards it: the more machines, the more expensive it is to attack. Fewer machines means that bill shrinks. At roughly 900 exahashes per second it's still enormous — nobody is taking over Bitcoin with a spare data center. But something genuinely new has happened. For the first time, Bitcoin's miners have a better-paying customer for their electricity, and Bitcoin has to outbid AI to keep them.

The one-line version: Bitcoin miners were never really in the Bitcoin business. They were in the cheap-power business, and AI just became the better customer. Watch the price around $190,000 — that's roughly where the two start fighting over the same plug.

Want to decode the next Bitcoin-or-AI-power headline yourself? The copy-paste prompt below walks you through it, one question at a time.