Q2 Losses Surge as AI Hosting Revenue Outpaces Bitcoin Mining Decline

Woofun AI reports that the crypto mining sector is undergoing a fundamental structural shift, with second-quarter earnings revealing a stark divergence between traditional Bitcoin extraction and emerging AI data center hosting. While mining operations continue to run, the financial narratives of major firms are increasingly defined by their pivot to high-performance computing (HPC) services. This transition is not uniform; it exposes significant profit gaps and operational realities across the industry, as analyzed by KarenZ for Foresight News, focusing on entities such as MARA and Core Scientific.

The financial pressure on traditional mining models was most acute for MARA, which reported a net loss of $611.3 million for the quarter. A substantial portion of this deficit, amounting to $343 million, stemmed from an unrealized loss on the fair value of Bitcoin holdings. This accounting treatment highlights the vulnerability of balance sheets heavily weighted toward digital assets when market prices fluctuate. The loss underscores that even with active mining operations, the valuation of held inventory can severely impact bottom-line results, independent of operational efficiency or hash rate growth.

In contrast, Core Scientific demonstrated a rapid revenue pivot, with high-density hosting income becoming its primary financial driver. Hosting revenue surged from $10.6 million in the same period last year to $136.7 million in the current quarter. This exponential growth indicates that the company has successfully moved beyond mere capacity announcements to actual service delivery. The shift from mining-centric to hosting-centric revenue streams suggests that early movers in infrastructure adaptation are capturing value from long-term rental agreements, fundamentally altering their income composition.

Bitcoin mining output remained under pressure despite increased production volumes, as evidenced by MARA's performance. The company mined 2,422 Bitcoins in the quarter, a slight increase from the 2,358 Bitcoins mined in the prior year's same period.

However, this volume gain was insufficient to offset market headwinds, resulting in a 27% revenue drop to $174.9 million. The data illustrates that in a bearish or volatile price environment, increased hash rate alone cannot preserve revenue levels, as the value per unit mined declines faster than production can scale.

Riot Platforms faced even more pronounced cost inefficiencies, highlighting the margin compression in traditional mining. The company mined 1,587 Bitcoins, representing an 11% year-on-year growth, yet its mining revenue fell from $140.9 million to $113.7 million. The value per Bitcoin produced dropped significantly from $98,800 to $71,667, while the cost per Bitcoin, excluding machine depreciation, rose from $48,992 to $49,912. Consequently, the proportion of costs relative to production value escalated from 49.6% to 69.6%, eroding profitability despite higher output.

Woofun AI data shows that performance varied among other major miners, with American Bitcoin maintaining healthier margins while Bitdeer struggled with cost overruns. American Bitcoin mined 932 Bitcoins, generating $67 million in revenue with a cost per Bitcoin of approximately $36,500, achieving a gross margin of nearly 50%. Conversely, Bitdeer mined 2,694 Bitcoins, a sharp increase from 565 in the prior year, and reported total revenue of $228.8 million, including $168.4 million from self-mined Bitcoin.

However, total costs reached $237.3 million, leading to a gross loss of $8.5 million and a net loss of $92.3 million, demonstrating that rapid expansion can outpace revenue generation if electricity and depreciation costs are not managed.

Core Scientific and TeraWulf are emerging as leaders in hosting dominance, with AI-related services comprising the majority of their income. Core Scientific's total revenue of $164.2 million was 83% derived from hosting ($136.7 million), leaving only $21.5 million from mining. TeraWulf reported $44.73 million in total revenue, with $31.93 million (71%) from HPC leasing and $12.83 million from digital assets. Looking ahead, TeraWulf projects $168.5 million in total revenue for 2025, with HPC accounting for 90% of total revenue (about $150 million), although the company generated its first HPC leasing revenue that year ($16.9 million), signaling a strategic reallocation of capital toward data center infrastructure rather than mining hardware.

Other firms remain in transitional phases, with mixed results in their AI service rollouts. Riot Platforms generated $174.2 million in total revenue, including $23.2 million from data center services, which comprised $4.9 million in leasing and $18.3 million in construction income. Cipher Digital, however, reported only $24.84 million in revenue, all from mining, alongside a negative $30 million EBITDA and a $267 million net loss. Cipher's Black Pearl project began delivering capacity in August, meaning HPC revenue has not yet appeared in Q2 figures. Hut 8 saw revenue rise from $41.3 million to $74.9 million, with $72.5 million classified under computing services, but still posted a $177.1 million net loss, including $138.6 million in unrealized digital asset losses.

A critical distinction exists between signed contract values and recognized revenue, a point often misunderstood in market analysis. Core Scientific has rented out 1.1 GW of capacity, corresponding to $24 billion in potential revenue, yet recognized only $136.7 million in hosting revenue for the quarter. Similarly, TeraWulf signed a 20-year lease with Anthropic valued at $19 billion initially, but recognized only $31.9 million in HPC leasing revenue. Riot signed a 191 MW lease worth $9.1 billion, with $23.2 million in recognized data center revenue. These figures clarify that long-term contracts represent future potential, not current income, and revenue recognition depends on phased delivery and construction completion.

The sector is fragmenting into distinct categories based on transition progress. Core Scientific and TeraWulf have already integrated significant hosting revenue, while Riot and Cipher are in mid-transition. Keel Infrastructure, formerly Bitfarms, has shut down its U.S. Bitcoin mining operations, resulting in $30.43 million in Q2 revenue, a 50% year-on-year decline due to the closure of its Moses Lake facility in April 2026. Its adjusted EBITDA was negative $23.7 million. As noted in 'Mining Bosses: The New Landowners in the AI Era,' the future belongs to those who can convert long-term contracts into actual revenue, moving beyond the volatility of Bitcoin prices to the stability of infrastructure leasing.