Hashrate Is Dropping: Is Hosted Mining Picking Up the Slack? | Bitcoin 2026

Yeah, good morning everyone. Hope you're enjoying the conference so far. Uh my name is Anthony Power. I'm the CEO co-founder of Power Analysis. Uh my co-founder standing from Rome, Bryce McNally. We run a media platform that focuses on uh Bitcoin mining and also the Bitcoin mining transitioning into the HPC AI space. Uh we've been doing this for over 2 and 1/2 years. Uh we've interviewed probably close to nearly 200 CEOs or senior team on the on the channel. Uh so if you want to have a look at any of your favorite mining CEO interviews, come along to Power Analysis and we've got them all there. Um I'd like to interview uh for the panel to introduce themselves. Charlie, if you start first and tell us who you're with. Yeah, thanks. Uh Charlie Brady, uh VP Investor Relations for Bitfufu. Okay, I'm Michael from 1Miner's and basically from the operating 10 sites worldwide for hosting. Um yeah, my name is Yash. I'm a CEO founder of Value Hash. We operate hosting sites in New York, Nebraska, and Kansas. That's excellent. So just to start the the the ball rolling and looking at um this title of the of the conversation, hash rate dropping, is hosted mining picking up the slack? Well, if you go back say 3 years ago, start of 2023 when the Bitcoin price was around about 16,000 and the global hash rate at that time was 253 exahash. Then we saw that gradual increase all the way through to October 2025, Bitcoin reached its all-time high of 126,000. The global hash rate was at nearly 1,300 exahash. Since October, we've seen a pullback in both Bitcoin price and we've seen a pullback in the global hash rate. It actually dropped to about 700 exahash. That's a significant drop. You know, that's even more significant than when China went offline back in 2021. Um Charlie, I'll start with you first. Do you have any understanding of why the hash rate has dropped so significantly over that last 6 months period? Any reasons that, you know, for that? Yeah, I mean, I think there's a few reasons that drive it. I think number one, obviously, the drop in the price of Bitcoin. You've got, you know, from a profitability standpoint, there's a lot of individual self-miners that weren't being profitable. Even some of the larger miners were had older machines were taking those offline, so that that's going to drop it. And the obviously the the pivoting that we've seen from some of the larger, particularly the public company miners, pivoting into HPC AI, using that power for something other than Bitcoin mining, you know, some of that capacity is coming offline, too. So, those are, you know, some of the bigger reasons, I think. Michael, anything to add to that? You you are definitely right with AI. I was taking like firstly, especially in well-developed countries like US, but I see, luckily, great future in Bitcoin mining for the other countries and other locations where the political stability is not as solid in United States. And there, maybe it might go the other way around. Okay. And from your position, you know, who's actually leaving at the moment? Have you Are you hearing anything from out there in the industry wise who's leaving the space? Yeah, I think, you know, whoever is being forced by the government, so Russia and China are, you know, your bigger sort of outside of United States players. They're having forcing miners in those jurisdictions to shut down. Russia just enacted like an autumn and a winter ban for mining in a lot of their jurisdictions, and they extended that on April 1st. So, you know, between United States, Russia, and China, you have 69% of mining. And as far as United States is concerned, you have a lot of utilities increasing the tariffs on miners. So, you know, with the pricing prices is they are forced to shut down and this winter was particularly hard for a lot of miners because the pricing of power was so high and everybody was forced to scale back. Yeah. Now, in terms of the mining industry, we've seen a lot of self-miners start that pivot towards high-performance compute. We've even had some of the prominent CEOs, Ben Gagnon, who's probably one of the OGs in the Bitcoin mining space, came out 12 months ago. Sam Tabar came out even before that and basically said the metrics for Bitcoin mining were making it really challenging for the mining companies to make a real margin to cover all their overheads. And with the Bitcoin price dropping as it has done from that all-time high back in October, the margins at the moment are proving for self-mining to be a challenge. Um Michael, from from a from a hosting perspective, it's a it's a different model. Tell us how you you guys are managing to to still make the the business model work during this cycle. We had to innovate and choose a little bit new model and offer something what the nobody else is offering here. And basically, we found a way how to like give opportunity to the older people to mine with the lower rates by fixing their electricity rates for 7 years. We really give them 7 years fixed rate. You give We give them also 7 years warranty. And we made them prepay. It sounds very bizarre, like it nobody would like to want it, but actually there's a huge demand for that. They are willing They are prepaying electricity for 7 years. So, we are sure for the contract for 7 years. We give them the price We give them the assurance and it lower the price for the hosting to somewhere to 4.5 cents even in United States, what makes now also Bitcoin still as profitable as it sound 1 year ago. So that's our adaptation at this moment for US market. Yeah. And and Yash from your perspective, how how's your model been able to operate in these challenging and and conditions at the moment? Yeah, I think we are energy first now. We are not just thinking about Bitcoin mining. So we have been proposing like shared revenue models where you are splitting profit at base rates around 4 cents 4.5 cents which caps your downside and then does give you the upside. It helps you survive the bear market. You know, it helps you pull in the capital with you know, your hosts as well as your you know, your clients and it really gives you a win-win situation where you have the upside but you cap the downside. Yeah. Charlie, I've been fortunate to see you give many presentations. I was in New York at the HC Wainwright conference when you gave a presentation on the company and myself and Bryce were really enamored with that there. We learned a lot from that presentation, did a lot more research. Can you tell the audience about I mean from a host perspective, you know, your self-mining is a small part of the business but you've you've managed to sort of like grow this this cloud hash rate. Can you tell the audience how that model's making it beneficial during these environmental change at the moment? Yeah, absolutely. So our cloud mining platform, we're essentially leasing our hash rate out to customers, primarily institutional customers but also retail customers. That's about 70-75% of our revenue right now is that cloud mining platform. And so we have the ability to dynamically move our hash rate, slide it back between self-mining or cloud mining depending on a variety of different economics where we are in the cycle. Given the market cycle where we've been past year year and a half, the cloud mining has really been dominant for us. So again, 70-75% and and what that allows us to do and is really to flex out our cost structure, flex out the revenue model and it's it just you know, it helps us to stay profitable through a market down cycle, through a market up So, you know, from from an adjusted EBITDA business, the company's been profitable uh, every year it's been in existence. Uh, and I think that uh, that's a big differentiator for us. And as a public company, obviously that's important to us to uh, to maintain that profitability and the cash flow. Yeah, that that's a real challenge. I I'm a chartered accountant by qualification and I go through literally all the balance sheets from every of the public miners. And these are the big public miners out there. Most of them are in the audience and and and hearing on at the actual conferences themselves. And if you look at their business over that period, the balance sheet clearly states if the company's been profitable since existence. And it it proves to be a challenging environment. And that's why you see many of them looking for uh, a move into alternative areas. Now, before we talk about alternative areas, um, Yash, from from um, from your perspective, uh, with this downturning self-mining, are you seeing that as an opportunity to grow the hosted model? Yes, absolutely. Because uh, we do control off all of our infrastructure. And as far as United States is concerned, we have a huge huge energy bottleneck in this industry right now. It's not the same as 4 years ago where you could go to any place and set up shop and um, you could get lower rates. That's not the case anymore. To even get the grid study in right now, where you would be paying just $20,000 for the grid to study your load, you are paying upwards of half a million dollars in uh, grids like SPP, where they are really discouraging any kind of speculative loads. So, you know, if you are sitting on that energy asset as a, you know, host or even as a self-miner, you are at a much bigger advantage than in the past years where you could really just set up shop anywhere and get similar kind of rates. That's not the case anymore. So, we are definitely starting to see a lot more uh, consolidation and that's coming towards like the hosted model now. Yeah. Michael, you mentioned about the the 7-year of fixed cost there and I think that's pretty amazing. That's sort of like, you know, fixed mortgage territory. Um in terms of um lots of mining companies moving from the space, does that equally give you an opportunity to maybe get machines at attractive pricing? If everyone's trying to leave, then the the supply is increased and demand might not be there. Therefore, price, you'd expect maybe to come down. What are you seeing from a a price perspective in the secondary market? Okay. The unfortunately, the prices of the miners, especially those which are more efficient, they didn't drop. They haven't changed. I don't know who is I know who is on in charge of getting prices. It's the certainly not nobody from states. It's basically the Chinese market. They set up the prices and sometimes they are a little bit behind of the Bitcoin prices. And we may like I can maybe make like to like a little bit fall of the prices by 20 30% maybe if the Bitcoin stay like this. It is possible, but for now we haven't noticed huge fall of the prices not at all. I would expect it, but they haven't fall. We don't notice. What what about the second hand market? Not the second the second hand market in terms of, you know, these big companies moving away from the space, they're going to start looking to offload miners and I've only been here what 3 hours this morning and I've had two conversations with two individuals who say they're looking to they're already buying machines from some established miners out there and I won't name the miners, but they are established mining companies and and it from that perspective it seems that they're getting some deals and that's probably more along the lines >> I I understand about the but 90% of all the machines which we deploy in the other data centers are new machines and I don't know what but we have a little bit incentives from the producers to put their only new machines and operate only with new machines and they are trying to get customers only with the new machines. So, we have different rates for people with older machines, with external miners, and for the people who are coming and buying new machines and like keeping these these wheels churning of the production. So, unfortunately, that's not not our business. >> Yeah. And Charlie, from your perspective, looking at your I'm going to say enormous retail um customer base, uh what are you seeing from their perspective? Are they Are they looking to get the most efficient mining machines, or is there is there a sort of like a price point which they're prepared prepared to invest in? Um how does how does that work for the metrics for retail investors? Yeah, I mean, a lot of it's going to go to what their energy cost is going to be, obviously, right? You've got to If you're behind a grid, you've got you know, sub 3 cents or sub 4 cents kilowatt hour power, you know, you don't necessarily need the the most efficient miner. Uh you can you can maybe buy something on the cheap. But I would say that's probably the minority. Uh I think the majority are probably looking for, you know, higher efficiency machines that they can get at a at a good price. And it'll be interesting to see when the next generation of miners start really hitting the market in a bigger way, you know, as the S23s start coming out and replace the S21s, what that does to S21 pricing. Um we we're running today almost entirely 100% S21s. Uh we're pretty much gotten rid of all the S19s uh in the market. So, you know, we're going to be adding more machines, but do we add S21? Do we add S23? It's really going to be an economic return on invested capital's decision for us. Uh and I will say, you know, we are fortunate that Bitmain is a a strategic partner in the company. We've got very good financing terms with them. Um and so, that you know, maybe gives us gives us a bit of an advantage on that from a return on capital standpoint. But um you know, I think uh it really depends on the investor base and what your energy It all comes down to electricity cost and what your energy cost is going to be. So, what how you want to position yourself for that. Yeah, and just for the audience's perspective, there are some other suppliers out there like Bitdeer and MicroBT as well as Bitmain. So, make sure all those companies are uh sponsors when we go through the panel. Uh Yasin, in terms of um uh power as um as the limiting factor or the bottleneck, do you see the AI space basically trying to grab as much power as possible out there and is that potentially going to impact your business or is it a case of you may be, you know, step into that space because, you know, it is the bottleneck for for HPC. Yeah, absolutely. The power prices, you know, you can look at the power forwards. They're supposed to go up because the demand is so huge and this is not a speculative demand. It's a very real demand that's coming through. You know, wherever we have our data centers like you have the hyper scalers moving in pretty close to us trying to set up thousand megawatts, 2000 megawatts data centers. But of [snorts] course, they're not going to get approved overnight or without really big conditions. Right now, they are definitely trying. They're definitely you know, a year ago we were saying like, you know, the hyper scalers or the bigger guys were saying, "Well, 300 megawatts or we really are not interested." But right now, the demand is so vast that even at 20 megawatts they're very interested and they're like, "Okay, we are fine with a three or four year ramp up and if you have 20 megawatts that's a big asset." So, and as far as their appetite goes, their profitability is like at least 10 to 15 times more than our most efficient machines. So, they really don't care about the power price right now. They just want to be plugged in anywhere and everywhere they can be. Yeah, but so so power price from a HPC standpoint is not as sensitive as it is to Bitcoin mining. Any any slight change in power price in the mining business is really, you know, very very challenging. Well, we hear these prices, you know, 4 and 1/2 cents, 4 cents. Charlie's mentioned, you know, if you're behind the meter, maybe wind power you can get probably closer to 3 cents a kilowatt hour. At those prices, Bitcoin mining can make a a make a margin if you've got an efficient fleet. But, you know, we we look at the sort of average efficiency across the mining industry probably closer to 30. Some of the top tier miners have got their fleets down to sub 15 now and that's really you know good going but to go along with that you've got to have the energy price as low as that as low as you know 4 and 1/2 4 cents to make that model work as well. So that's the real the real challenge. Michael in terms of you know you your 7-year fixed contracts. I'm assuming your business model at the moment is just focused on growing the hosting business and not really looking to move power towards compute like many of your peer companies out there. Yeah basically me personally the best position because yes in United States we are losing some sites due to the AI. We know why they have more money find out their huge finances deposits which are in AI this immense you cannot beat it with the crypto mining no way. But we are global. I'm from Europe and we have like 10 sites in the world and there is different situation in every country every every region. In Europe we are also like building other companies our companies AI data centers. We have that. But the mining is going to go a little bit down in the in US but with less stable political countries like Nigeria Ethiopia even in Kazakhstan we are even building the site you would not believe that but even in Ukraine the mining is there. You cannot put any AI systems there is very unstable those machines are expensive investors are not going to give you money for that but but this gives opportunity for these countries to do very cheap mining and Bitcoin and I believe that they are they will put it and push it forward. So basically AI is taking opportunities from us in these states. We are losing the sites also in Norway, but uh in Europe all majority of AI sites will be built not by the market, by the freedom, but on unfortunately by incentives and I would say stealing of public funds because that's basically how it is. Yeah. Interesting you mentioned Kazakhstan there. It's a country I spent over 3 years in in the oil and gas industry. Uh my wife's from Kazakhstan, so I know a little bit about the country and I know a little about a bit about the power infrastructure and it's not great in Kazakhstan. Remember when China banned the uh the the Bitcoin mining back in 2021, where did those miners try to get to first? Kazakhstan because it borders China and just put into context, Kazakhstan's about the size of Europe in terms of area size, but it's got the population of greater London, which is a city in the UK. And so, you know, they don't have the power um infrastructure to deal with anything more than domestic supply really to a certain extent. And that's why, you know, the the the the the legislation in Kazakhstan has been put in place there to stop people trying to uh take power away from the domestic supply cuz that's what was happening uh for quite a long time uh before the government sort of got involved. But Charlie, coming coming to you in terms of uh your model at the moment and um you're obviously a a public mining company, so you know, access to levers probably that little bit more easier for a public company going forward. Where do you see HPC AI from a Bitfufu standpoint as you're currently focused on self-mining and hosted stroke cloud hash rate? Yeah, I mean, we're we're certainly evaluating it. I don't think you can ignore it. Um but you know, we the company was founded on an asset-light model. So, the majority of our hash rate we still lease uh the capacity. We do own a site in Ethiopia, uh site in Oklahoma, and uh we've got uh a site couple sites in Arkansas, but the majority of our uh capacity is still leased and so, you know, we're continuing to look and build out the owned footprint. Uh you know, it obviously has to be an owned footprint uh to do to to transfer over to HPCAI. But, you know, we also look at the return on invested capital. I mean, the capital cost of building out a an AI HPC data center are are, you know, exponentially higher. You know, 8 million, 10 million, 12 million a megawatt as opposed to 400,000, 450,000 maybe a megawatt. Uh and the other point I'd make is, you know, not every Bitcoin mining site is ideal for AI HPC. Uh maybe the fiber's not there. Maybe the infrastructure's not there. Maybe the distance isn't right location. So, you know, we do have uh you know, I get I get incoming, you know, um inquiries with folks who have a a data center, Bitcoin mining data center, that are looking to uh either partner up or or sell it outright or or work some some arrangement. Um and that the those sites don't necessarily work for AI. So, I'll agree that, you know, the HPCAI has definitely created more competition, particularly on larger sites, I think. But, it uh does not mean that there are no um there's no It does not mean there's no availability for Bitcoin mining sites uh that could work, you know, quite well. Again, it all depends on, you know, what's the energy cost going to be for me, right? And how's that set up? But, um we're we're still you know, we're still evaluating that and I think at some point if we get a greater footprint, we might move into that. But, again, it's it's an ROI standpoint and um the payback is not, you know, in some of these sites. It'll be interesting to see what the payback's going to be in 3 to 5 years out from now. I'm not I'm personally not convinced that it's going to be um as great as some folks are talking about. Welcome to Predict. The world is a market. Everything is a market. Every headline moves the line. Every moment is your market. Call the moves. Bet on your instinct. Your prediction, your edge. Dual bits, predict where everything is a market. That's that's actually quite a good segue there, Charlie. Uh we've looked at the sort of like the halvings every 4 years. So, every 4 years uh revenues from Bitcoin mining drop by 50%. The amount of Bitcoin mined per day drops by 50%. So, at the moment, we're mining 450 Bitcoin per day, which most of that Michael Saylor seems to be buying for his company's strategy. Um in 2028, April, that reduces to 225 Bitcoin. Yeah, actually in terms of mining, whether it be self-mining or hosted mining, where do you see uh the the the metrics in say 3 years' time from here? Well, Bitcoin price, we would hope, would be much higher than what it is today. Um but we certainly see, you know, mining getting a lot more decentralized. Uh smaller sites are a bit easier to set up and manage and get a favorable power rate. Um I do see off-grid mining becoming a bigger player um as the on-grid kind of uh becomes an issue in all the bigger countries like US, China, and Russia because and even Ethiopia, to some extent now, they are really not very welcoming of the miners. They're pulling back some of the permits. So, you know, I see off-grid, more decentralization, and smaller sites. Absolutely. Um in in terms of um the metrics, you know, are we seeing in 3 years' time because you know, do you see an increase in hosted mining versus self-mining over the over the next 3 years as we we approach that halving and many miners start to think for them it's the the end game. That halving is like a fixed a fixed line now that they don't really want to go past. Yeah, I would like to see like like progression of the self-hosting and the small miners because I believe it helps decentralization of Bitcoin and also it helps to spread positive values and positive thinking about Bitcoin because once in the all these small communities all the people are earning money on Bitcoins they share it they share it in the pub they talk with the people they show off the correct way because it's not so much that but it's enough to have to bring positive mood. So basically I would like to see that. But the that is usually decided by not us but by very small things and the energy prices decided and by the politicians. How is that possible for the people? So in US definitely for now I believe it will be institutionalized little bit and there will be hosting and the hosting hosting sites like leading the market. But the more you go to east and more you go to the like less developed countries that that that favorize not not institutions but the individuals which have mining size of half megawatt, one megawatt, two megawatt and they are even able with this size to bypass very strict regulations because basically in Europe in everywhere in Europe you are not allowed to use your produced electricity. You have power station you are not allowed to use your electricity. You first need to put it to the to the to the grid and then rebuy it back with all the taxes on top of it which makes it like 50% more expensive. But but if you do it in small scale in certain exceptions you can do it and all these small miners are able to do it and also they are able to do it in Europe. They are also able to do it in the let's say not so I don't want to mention the countries but not so not so free countries and there there will be the grow of the individual mining. I hope so. Yeah. Final one for you Charlie before I I I pass it to all of you to to give a wrap-up. Um in terms of um people understanding metrics out there, people understand probably Bitcoin price because it's it's there now on all the financial uh screens on like CNBC or Fox or various other channels like Bloomberg. Um what other metrics uh are important to to uh Bitfufu uh from a daily perspective? Yeah, I mean, obviously we're looking at what the difficulty rate's going to do. Uh that's a big one, obviously. Um hash price, I think that's the other big one that people look at in from the what's the profitability going to be in as far as Bitcoin mining goes. I mean, those are the two big demand factors for us other than the price of Bitcoin. Um And and beyond that, it just, you know, becomes more macroeconomic kind of oriented data. Yeah, thanks very much. Right, coming up to the last 2 minutes. I'm going to give you all a chance to um effectively let the audience know where they can uh contact the company, your website, etc. like that. If you start, Yashin. Yeah, we have a booth here, um 861. Please stop by. We would love to talk uh shop about Bitcoin, energy, hardware, procurement, anything. Um you know, you can reach me at [email protected] or our website valleyhash.com. Guys, we are in the end there with a booth. We have amazing offers, like we announced it at the conference, those rates, 4.5 cents and even below 4 cents in Nigeria, where we have also company and site, where we one of the biggest sites basically in Nigeria. So, we mastered that. We give you 7 years warranty. Through the years, we mastered the service centers and everything, and we are also open to the investors, and we find the way how to ins- do it the way that even your banks would give you uh give you a little bit loans for your investing in the mining. Yeah, so we've got a booth here as well over at uh 863, kind of in that direction, if you will. Um I'm on the my my email is It's pretty easy to find. It's on on so um And again, we've got some other folks from our biz dev biz dev team here as well and if you go to the booth, we do have a new hosting set up that we've introduced this at the conference here today, so so check that out as well. Thanks very much. I'm Andy Power from Paranoid and if you want to contact us, we've got a website, a regular newsletter out every Friday and we also have a podcast which is daily during the week. So please come and have a look and subscribe if you can. Thanks very much for the panel today. Please show your appreciation for the three names given. >> [music] >> Every year this community comes together to celebrate to debate >> [music] >> to build what comes next. And every year the [music] stage gets bigger. Sound Money center stage. [music] So where do you go to celebrate the next chapter in Bitcoin history? [music] You come home. >> [music] >> Nashville, July 2027.