This article is a deep-dive from JudyAI Lab — an AI engineering playbook series with 100+ published guides, 5,000+ weekly readers across 60+ countries, focused on the practical side of running AI agents, trading systems, and content pipelines in production.
One Number That Changed How I See Bitcoin Mining
The other day while reviewing data, I came across a number: RIOT Platforms’ average Bitcoin mining cost for all of 2025 was $49,645 per coin.
That’s a 54% increase from $32,216 in 2024.
Then another number: throughout 2025, global Bitcoin network hashrate grew by 47%.
Put these two numbers together and they tell the same story – mining is getting more expensive, competition is intensifying, and profit margins are being squeezed to the limit.
Then I started noticing that the major mining companies I’d been tracking were doing things that seemed completely unrelated to “mining coins.” Some were leasing data centers to AMD, others were packaging hashrate as financial products, and some straight-up changed their names to drop the word “mining.”
This isn’t a few isolated cases. It’s a structural transformation of an entire industry.
Infrastructure Absorption: When Power Infrastructure Is Worth More Than Bitcoin
To understand hashrate financialization, you first need to understand a more fundamental trend – I call it “infrastructure absorption.”
What do Bitcoin miners actually have? Not just mining rigs. They have massive power connections, land, cooling systems, and high-voltage substations. These assets typically take 2-4 years to build.
Then AI exploded.
Tech companies worldwide are scrambling to build data centers, but power infrastructure supply can’t keep up. Building a new 100 MW power connection, from planning to energization, takes 3-5 years in the United States.
Miners suddenly realized they were sitting on a gold mine – not the Bitcoin kind, but an infrastructure gold mine. They already had ready-made large-scale power capacity, and AI companies were willing to pay premium rent for it.
The most extreme example is Bitfarms. On April 1, 2026, the company officially rebranded as Keel Infrastructure, changing its ticker from BITF to KEEL, calling itself a “pure-play digital and energy infrastructure company.” Their flagship Panther Creek campus is already energized at 350 MW, expanding to over 500 MW, with a total pipeline of 2.2 GW.
A Bitcoin mining company literally removed “mining” from its name.
Core Scientific moved even earlier. This company, once one of the largest publicly traded Bitcoin miners, now has “High-Density Data Centers at Scale” on its website homepage. They secured strategic financing of up to $1 billion from J.P. Morgan, with over 1,300 MW of power already contracted. Even the Cadillac F1 team became one of their data center partners.
And RIOT Platforms’ approach is one of the most representative cases to date.
RIOT’s Billion-Dollar Bet: Leasing Out Beats Mining
In January 2026, RIOT announced a blockbuster deal – a data center lease and services agreement with AMD.
Note: this is a lease, not an acquisition. RIOT is the landlord, AMD is the tenant.
Here are the specific terms:
- Initial Scale: 25 MW critical IT load capacity
- Initial Contract Term: 10 years, valued at approximately $311 million
- Expansion Option: Additional 75 MW capacity
- Priority Renewal Rights: Additional 100 MW
- Three Five-Year Extension Options: If all exercised, total contract value of approximately $1 billion
- Location: Rockdale, Texas, where RIOT also purchased 200 acres of land ($96 million, funded by selling approximately 1,080 Bitcoin)
RIOT CEO Jason Les said something that stuck with me: “Less than 12 months since we formally initiated our AI/HPC asset evaluation process.”
12 months. From a pure Bitcoin mining company to signing a billion-dollar data center lease.
Expected average annual net operating income is approximately $25 million. Conversion capital expenditure was $89.8 million, working out to about $3.6 million per MW. Compared to the marginal costs and price volatility risks of mining coins each year, the stability of rental income is on a completely different level.
The Rockdale site has 700 MW of grid connection. If AI demand continues to grow, they have massive capacity left to lease out.
Another Path: Turning Hashrate into Financial Products
Not every miner wants to become a landlord. Some have chosen a different path – turning hashrate itself into a financial asset.
This is the core logic of “hashrate financialization.”
Hashrate-Backed Loans: Coinbase’s New Role
In late 2025, Coinbase Asset Management (CBAM) quietly launched a new product – lending services for Bitcoin miners.
CBAM’s Head of Credit Investments, Doug Wilson, explained the product’s essence in an interview with Blockspace Media: “We developed a product where we will make loans to the mining space, but what we call a flexible collateral package – we accept hashrate as collateral.”
An important clarification here: Coinbase is doing hashrate-backed loans, not hashrate forward contracts. They’re not buying miners’ future hashrate; they’re accepting hashrate, data center facilities, and Bitcoin as collateral to provide loan financing.
Bloomberg’s August 2025 headline put it bluntly: “Coinbase is Quickly Becoming a Go-To Lender to Bitcoin Miners.”
What’s the significance?
Previously, miners had only two options for working capital: sell coins or dilute equity. Now there’s a third path – use hashrate as collateral for loans. This means miners can access liquidity while holding Bitcoin, and an institution of Coinbase’s caliber entering the space signals that Wall Street has officially recognized “hashrate” as collateral.
Hashrate Forward Contracts: Luxor’s Derivatives Market
If Coinbase handles the “lending side,” Luxor Technology handles the “trading side.”
Luxor claims to operate “the world’s largest hashrate forward contract market,” with publicly available data from their website:
| Metric | Data |
|---|---|
| Market Participants | 120+ |
| OTC Trading Volume | Over $500 million |
| Peak Daily Settlement | 25 EH/s |
| New Clients in 2024 | 30 |
| 2024 Notional Trading Volume | $65 million |
Hashrate forward contracts work very similarly to agricultural commodity futures. Miners can lock in hashrate prices (hashprice) for 1-12 months ahead, ensuring predictable revenue for a set period. When Bitcoin’s price drops or mining difficulty surges, miners who’ve already locked in prices won’t suffer losses from market volatility.
Settlement can be cash-based (Non-Deliverable Forward, NDF) or physical delivery.
Luxor also operates the Hashrate Index research platform and LuxOS mining firmware, forming a complete hashrate financial ecosystem.
Hashrate Tokenization: Structured Notes On-Chain
In March 2026, CoinDesk reported an interesting case – the Omnes Mining Note (OMN).
OMN is an institutional-grade structured note where each unit represents a fixed 1 PH/s of hashrate over a 36-month term. It was tokenized by Apex Group (managing over $3.5 trillion in assets), issued on Coinbase’s Base chain using the ERC-3643 standard (an RWA compliance standard developed by Tokeny).
What does this represent? Hashrate has officially moved from being a technical concept into the realm of structured finance. It has a clear underlying asset (hashrate), a maturity date (36 months), a compliance framework (ERC-3643), and institutional-grade custody and issuance.
Another tokenization example is Loka Protocol, which lets miners sell future hashrate in the form of tokenized mining contracts. The principle is similar to commodity futures contracts, but executed on-chain.
The Complete Picture: Five Tools of Hashrate Financialization
Putting it all together, hashrate financialization has developed five major categories of tools:
| Tool Type | Representative Example | Essence |
|---|---|---|
| Hashrate-Backed Loans | Coinbase Asset Management | Borrow money using hashrate as collateral |
| Hashrate Forward Contracts | Luxor Derivatives | Lock in future hashrate prices |
| Hashrate Tokenization | Omnes Mining Note / Loka | Package hashrate as on-chain securities |
| Hashrate ETF | Grayscale MNRS | Mining stock index fund in the equity market |
| Data Center Leasing | RIOT + AMD | Convert power infrastructure into stable rent |
The common direction of all five tools: transforming hashrate from a consumable resource into a cash-flow-generating asset.
Why Now? Three Structural Drivers
Driver One: Post-Halving Survival Pressure
Bitcoin’s 2024 halving cut block rewards from 6.25 BTC to 3.125 BTC. Miners’ revenue was cut in half overnight.
CoinShares’ report noted that up to 20% of Bitcoin miners cannot turn a profit at current hashprice levels. RIOT mined 5,686 Bitcoin in 2025 at an average cost near $50,000 – a number dangerously close to Bitcoin’s market price.
In this environment, miners need new revenue sources, not just prayers for higher coin prices.
Driver Two: The AI Infrastructure Supply-Demand Gap
Global AI data center capital expenditure in 2026 is estimated at $400-450 billion. But power infrastructure supply falls far short of demand. New power connections take 3-5 years, while miners already have ready-made large-scale capacity.
MARA (Marathon Digital)’s strategy best illustrates this point. They’re walking two paths simultaneously:
- Partnering with Starwood to accelerate hyperscale data center delivery
- Partnering with MPLX to build integrated power generation and data center campuses in West Texas
- Mining 15,133 Bitcoin in 2025 while actively building out AI operations
Hashrate Index even coined a term: “multi mining” – running Bitcoin mining and AI inference at the same site, AI in front, mining rigs in back.
Driver Three: Institutional Recognition of Hashrate as an Asset Class
When Coinbase Asset Management accepts hashrate as collateral, when Apex Group packages hashrate into structured notes, when J.P. Morgan provides billion-dollar financing to transformed miners – these signals combined indicate that traditional finance has officially recognized “hashrate” as a legitimate asset class.
Grayscale launching the Bitcoin Miners ETF (MNRS) follows the same logic. Regular investors can now invest in mining indices through the stock market without needing to understand what hashrate or ASIC means.
Risks and Reality
Time for some cold water.
Hashrate collateral valuation issues. Hashrate value depends on Bitcoin price and mining difficulty, both extremely volatile variables. If coin prices crash, collateral value shrinks accordingly – similar to how Celsius used BTC as loan collateral in 2022, and we know how that ended.
Capital expenditure pressure from transformation. RIOT spent $89.8 million just to retrofit Rockdale for AMD. Not every miner has the financial capacity for such a transformation.
Cyclicality of AI demand. Everyone is scrambling for GPUs and data center space right now, but history tells us every investment wave eventually hits a supply glut phase. If AI investment slows, miners locked into long-term leases could face the risk of idle capacity.
Tokenization liquidity risk. Products like OMN have sound structures, but whether secondary market liquidity can keep up remains to be validated over time.
The cautionary tale of Blockstream BMN. Blockstream’s early Mining Note (BMN) was a pioneer in hashrate tokenization, but at the time of verification, their mining page returned a 404 error, suggesting the product may have been restructured or discontinued – a reminder that the pace of obsolescence in this space should not be underestimated.
My Observations
From an investor’s perspective, what I see is an industry transitioning from a “single revenue model” to “diversified financial assets.”
Bitcoin mining won’t disappear. But the era of making money purely by mining coins is ending. Future mining companies will look more like a combination of “energy infrastructure companies” and “hashrate financial service providers.”
If you’re following cryptocurrency investments, I suggest looking beyond just coin prices. Look at these mining companies’ infrastructure valuations, how many MW of long-term leases they’ve signed, and how many institutions participate in their hashrate financialization products.
These metrics may be far more important than tomorrow’s coin price movements.
Data sources referenced in this article:
- RIOT Platforms 2025 Annual Report and January 2026 Press Release
- Foley & Lardner LLP Press Release (February 2026, legal counsel for RIOT-AMD lease transaction)
- Blockspace Media interview with Coinbase Asset Management’s Doug Wilson (December 2025)
- Bloomberg report (August 2025)
- CoinDesk reporting on Omnes Mining Note / Apex Group (March 2026)
- Luxor Technology official website
- CoinTelegraph report (April 2026)
- CoinShares 2025 Bitcoin Mining Report