Transformed AI Mining Companies Plummet 23%: Volatility Overtakes Crypto

According to Woofun AI, the AI data center circuit, once viewed as a safe haven for Bitcoin miners, is rapidly evolving into a more destructive source of volatility than the cryptocurrency itself. The CoinShares Bitcoin Mining and Digital Energy ETF (WGMI.US) has retracted sharply by 23% this year after surging 72% last year due to the AI boom. This sharp reversal marks a shift in market sentiment from fanaticism to deep doubts about infrastructure profitability.

The root cause of this transformation dilemma is that Bitcoin miners originally used the advantages of existing power supply and cooling facilities to cross borders to cope with shrinking returns brought about by the halving mechanism and increasingly fierce competition for computing power.

However, as technology giants such as Google (GOOGL.US), Amazon (AMZN.US), and Microsoft (MSFT.US) increased their investment, although the value of the original facilities was theoretically increased, actual operations were doubly squeezed by soaring financing costs and a surge in data center construction costs. Ben Gennan, CEO of Kill Infrastructure (formerly BitFarms), had a very representative exclamation: after leaving Bitcoin, they discovered a more volatile market.

Although the company has completely stopped its Bitcoin mining business in the US, and it is expected that the three data centers will start generating revenue starting next year, it has yet to obtain any new customer contracts and has fallen into a vacuum with no source of revenue. Meanwhile, the stock price of CoreWeave (CRWV.US), which is seen as a benchmark for transformation, has dropped 25% since this year, reflecting widespread market concerns about the sustainability of the AI cloud service business model. Tesla (TSLA.US) CEO Elon Musk even issued a stern warning, pointing out that companies that rely too much on AI data center revenue will face severe financing difficulties. It is expected that a large number of more than 200 emerging AI cloud service companies will go bankrupt or be merged.

This pessimistic macro-level expectation directly suppresses the valuation space of related companies, making transformation strategies originally aimed at risk diversification, instead becoming a catalyst for increasing financial pressure.

The more critical variable is that this business transformation is sending huge selling pressure to the Bitcoin market, creating a negative feedback loop. According to data compiled by Woofun AI, listed mining companies sold 48,900 bitcoins in the first half of this year alone, setting a record high for the same period in history. Nedum analyst John Todaro pointed out that Bitcoin sales are expected to continue to increase in the second half of this year and the beginning of 2027 due to the increasingly difficult financing of data center construction.

This sell-off did not stem from being bearish about Bitcoin's long-term value, but rather a desperate act of short-term liquidity management. Using CleanSpark (CLSK.US) as an example, the company adopted a more conservative “mining+AI” dual-track strategy and continued to operate existing mining facilities while building data centers to obtain cash flow. Its CEO Matt Schultz made it clear that instead of making large-scale new investments in Bitcoin mining, it will be used as a means to obtain electricity and use BTC holdings worth more than $1 billion as capital assets.

Despite the apparent soundness of the strategy, CleanSpark (CLSK.US) shares have dropped 19% this year, showing the market's discounted valuation of its hybrid model. In contrast, companies that have completely abandoned mining, such as Kill Infrastructure, have not only lost stable daily mining earnings, but are also burdened with heavy debt, and their survival situation is even more fragile.

From a structural point of view, Bitcoin mining companies' migration to the AI sector did not become the perfect safe haven as expected; on the contrary, it revealed the vulnerability of infrastructure investment under the capital-intensive and long-term nature. When the profitability of AI investments was questioned and the financing environment tightened, these companies had to sell off core assets to maintain operations, which not only exacerbated short-term fluctuations in the Bitcoin market, but also revealed deep risks in cross-border transformation. This is yet another major strategic test facing the Bitcoin miner community after the 2022 crypto winter. The ultimate outcome will depend on how quickly AI infrastructure requirements are actually implemented and the company's own ability to manage cash flow.