Bitcoin mining companies that have pivoted toward artificial intelligence infrastructure are facing significant market headwinds, with shares of major players dropping sharply this year. According to a recent report, the stocks have given back substantial gains made earlier in the year, and short interest in the sector is rising.
IREN (NASDAQ: IREN), the Australian company that secured a $2 billion investment from Nvidia, has dropped to $27, its lowest level since September 2025. This represents a decline of 65% from its all-time high. Riot Platforms (NASDAQ: RIOT) has fallen to $13.72, down 55% from its highest point this year. MARA Holdings (NASDAQ: MARA) has slumped to $7.53, its lowest level since February and 68% below its record high. Other companies in the sector, including Core Scientific, Terawulf, Cipher Digital, and HIVE Digital, have also experienced significant declines.
Short sellers have reaped billions of dollars from these plunging valuations. Short interest data indicates that IREN has a short interest of 20.7%, while Riot and MARA have 12.8% and 26%, respectively.
The challenges facing the miners are multifaceted. Bitcoin has been in a bear market, and mining difficulty continues to climb. Additionally, the artificial intelligence industry, while still booming, requires massive capital expenditures. VanEck has suggested that these companies need $50 billion in near-term funding. To secure this capital, firms are reportedly selling Bitcoin and borrowing billions of dollars.
Gartner (NYSE: IT) recently issued a warning regarding neocloud companies, projecting that they face $3.8 trillion in impairments by the end of 2030. The firm noted that data center depreciation is rising as newer GPU models are launched. Gartner also projected that AI data center owners will need to generate $8.5 trillion in revenue to cover capital spending, financing costs, and a 12% return on invested capital, while total revenue is expected to reach only $3.6 trillion.
Concerns regarding an AI bubble are also contributing to the market pressure. Analysts including Michael Burry, David Rosenberg, and Ray Dalio have warned that the AI sector may be overextended as interest rates rise. Furthermore, competition is intensifying, with companies like SpaceX and Meta Platforms entering the market. Meta has confirmed plans to lease its extra space to clients.
Financial metrics from recent earnings reports highlight the strain on profitability. Depreciation and amortization costs have risen significantly, consuming a large portion of revenue. IREN reported depreciation and amortization of over $112 million on $137 million in revenue. Riot Platforms and MARA Holdings reported D&A costs of over $98 million and $174 million, respectively.
