Bitcoin mining firms have taken on unprecedented levels of debt, with total borrowings surging 500% year-on-year, from $2.1 billion to $12.7 billion, as the industry braces for intensifying competition and a technological arms race.
According to a new VanEck report, miners are pouring billions into next-generation hardware and artificial intelligence (AI) infrastructure to defend their share of the global hashrate, the key measure of mining power on the Bitcoin network.
VanEck analysts Nathan Frankovitz and Matthew Sigel described the situation as a “melting ice cube problem,” where mining equipment loses value rapidly as more efficient machines hit the market. Without constant reinvestment, miners risk losing their edge and, with it, their portion of daily Bitcoin rewards.
“Without continued investment in the latest machines, a miner’s share of the global hashrate deteriorates, resulting in a reduced share of the daily awarded Bitcoin,” the analysts said in the firm’s October Bitcoin ChainCheck report.
Debt Becomes the Weapon of Choice
Historically, mining companies have turned to equity markets to finance hardware upgrades. But as equity funding becomes increasingly expensive and difficult to secure, firms are turning to debt financing for greater predictability and lower capital costs.
“Miners’ revenues are difficult to underwrite because they rely almost entirely on the price of Bitcoin, which is speculative,” Frankovitz and Sigel noted. “Debt has become a cheaper and more predictable alternative.”
Data from The Miner Mag underscores the growing reliance on leverage:
- Combined debt and convertible-note offerings from 15 public miners reached $4.6 billion in Q4 2024,
- Dropped to just $200 million in early 2025,
- And then rebounded to $1.5 billion in Q2 2025, reflecting renewed investment momentum.
Several major miners have recently tapped the credit markets:
- Bitfarms raised $588 million via a convertible note in October to fund AI and high-performance computing (HPC) infrastructure in North America.
- TeraWulf launched a $3.2 billion senior secured notes offering to expand its Lake Mariner data centre in New York.
- IREN completed a $1 billion convertible note issuance, allocating proceeds toward new projects and general operations.
This debt-fuelled expansion highlights how miners are positioning themselves not only for Bitcoin production but also for the lucrative AI infrastructure boom.
AI Becomes the Lifeline for Post-Halving Profitability
Following the April 2024 Bitcoin halving, which slashed block rewards from 6.25 BTC to 3.125 BTC, profitability across the mining sector took a sharp hit. In response, many operators began diversifying into AI and HPC services, leveraging their existing power and cooling infrastructure to secure new revenue streams.
“In doing so, miners have secured more predictable cash flows backed by multi-year contracts,” VanEck’s analysts said. “The relative stability of these cash flows has enabled miners to tap into debt markets, diversifying their revenues from Bitcoin’s cyclical prices.”
This strategic pivot has been seen as a way to balance the unpredictable nature of Bitcoin with the steady demand for AI computing power. VanEck argues that AI’s increasing demand for electricity is a net benefit to Bitcoin miners, allowing them to optimise operations and reduce overall capital costs.
Synergy Between Bitcoin and AI Strengthens Infrastructure
While some critics have expressed concern that miners’ growing focus on AI could dilute their Bitcoin operations, VanEck dismisses this notion. The firm argues that the synergy between the two sectors could, in fact, enhance Bitcoin’s resilience and sustainability.
“Bitcoin mining remains one of the most efficient methods to monetise excess electricity, especially in remote or developing markets,” said Sigel and Frankovitz. “This interplay between Bitcoin and AI allows for better capital efficiency, both financially and electrically.”
As AI inference workloads fluctuate throughout the day, miners can redirect unused energy capacity back to Bitcoin mining or other computing tasks, reducing downtime and boosting energy efficiency. This dynamic also helps replace costly backup systems like diesel generators, further improving environmental performance.
A Risky but Adaptive Future for Bitcoin Mining
While the fivefold jump in miner debt signals rising financial risk, it also marks the industry’s adaptation to new market realities. The convergence of AI, renewable energy and Bitcoin mining is creating a more flexible and diversified business model.
If managed effectively, this new hybrid approach could secure miners’ profitability and reinforce Bitcoin’s network stability heading into 2026 and beyond.
However, the growing dependence on debt means miners must carefully balance expansion with risk management or risk turning the hashrate race into a leverage-fuelled gamble.
