AI wants Bitcoin miners’ power, but the contracts reveal who really gets paid

Bitcoin miners spent years securing cheap electricity, building substations, and negotiating grid connections needed to power their operations. Now AI companies want those connections so badly they're willing to make aging mines valuable real estate. The ASICs that mine Bitcoin are practically useless for training AI models, but the land, substations, and power agreements around them could spare data-center developers years of waiting.

Strategic Shifts

SWI Group took control of Bitcoin miner Genesis Digital Assets earlier this year and announced an €800 million capital increase on Oct. 12 to expand its AI infrastructure business. Two weeks later, it launched SWI Compute, disclosing roughly $1 billion in NVIDIA equipment orders and its first customers, with some contracts still being finalized.

As part of the fundraising, Genesis is becoming part of a much bigger bet on selling computing power rather than mining BTC. It's an irresistible trade on paper: take an industrial property built to consume enormous amounts of electricity and give that electricity to customers willing to pay considerably more for it.

Conversion Challenges

Unfortunately, you can't turn Bitcoin mining facilities into AI data centers just by plugging different computers into the wall. The conversion requires extensive retrofits, cooling that can handle much denser hardware, sophisticated networking, construction financing, and customers willing to commit to the finished product.

Until the facility is operational, the promised revenue is just that: a promise. Bitcoin mining equipment is losing value, with Core Scientific writing down $266.5 million of mining equipment and infrastructure in the first quarter as Bitcoin prices and secondhand equipment values deteriorated.

Contract Realities

Core Scientific's agreements with AI cloud provider CoreWeave show where the money goes. CoreWeave helps fund construction but recovers some of that contribution through rent credits, while Core Scientific borrows billions, builds the facilities, and risks penalties for late delivery.

That's how a mining property can become much more valuable without its owner receiving anything close to that value: electricity draws the customers in, but the contracts determine who gets paid. CoinShares estimated converting mining infrastructure to AI-grade facilities costs roughly $8 million to $15 million per MW, against $700,000 to $1 million per MW for conventional mining infrastructure.

Revenue Distribution

Core Scientific reported $136.7 million of colocation revenue in the second quarter, with 437 MW billing customers by mid-July. More than a quarter of that revenue represents a utility bill being passed along, rather than money Core Scientific earns for providing the facility.