Bitcoin (BTC) transaction fees now account for just 0.69% of total miner revenue, marking a ten-year low as major mining operations increasingly pivot to artificial intelligence computing.

According to data from onchain analytics platform Glassnode, fees as a proportion of miner revenue remain near decade lows after having fallen to 0.52% in April. Fees have made up less than 1% of miner revenue for nearly a year, Glassnode co-founder Rafael Schultze-Kraft noted on X.

"Bitcoin was below $400 the last time fee share was this low," he said.

The figures underscore a long-standing question about Bitcoin's economic security model: over time, the block subsidy is designed to diminish through programmed halvings, with transaction fees expected to eventually compensate for the declining minting reward. That fees remain a negligible fraction of revenue — even as the subsidy was cut from 6.25 BTC to 3.125 BTC at the April 2024 halving — highlights how far current network usage is from replacing that income stream.

Miners increasingly dependent on block subsidy

With transaction fee revenue at historic lows, miners are growing more reliant on the fixed block subsidy — the amount of newly minted BTC awarded per block, currently set at 3.125 BTC. The squeeze on profitability has been compounded by Bitcoin's price falling nearly 50% since its October 2025 all-time high, reducing the US dollar value of the block subsidy.

Data from onchain analytics resource Checkonchain places the estimated average production cost of one Bitcoin at $78,254 as of Tuesday — nearly 23% above the current spot price.

Declining Bitcoin prices combined with rising electricity costs have squeezed profit margins and forced smaller miners out of the market. The pressure has been particularly acute for operators without access to low-cost power contracts or efficient hardware, accelerating consolidation across the sector.

Hash rate drops 33% from October peak

Bitcoin's network hash rate, an estimated measure of the computing power securing the network, reflects a mining sector under significant strain. According to Checkonchain, hash rate has declined from its October 2025 peak of 1.3 zettahashes per second (ZH/s) to 861 exahashes per second (EH/s) — a 33% drop.

Analysts flag AI pivot as "concerning development"

Independent analyst William Clemente acknowledged the downturn in analysis published over the weekend, while noting that automated difficulty readjustments would have incentivized miners to boost activity. However, with difficulty now rising again, the shift toward more lucrative AI and high-performance computing (HPC) has become increasingly visible.

"There is no other way to slice it, hash rate has been in a decline. This has taken place as miner margins got squeezed post 2022 from more competition and higher energy prices, but more importantly the pivot of many into AI/HPC, which so far have shown to be prudent business decisions for the public names that have done it," Clemente wrote.

He added: "This dynamic has been reinforced as Bitcoin has underperformed AI related assets & the rate of change in demand for compute."

The pivot leverages an asset many miners already possess: large-scale, grid-connected power infrastructure. Facilities originally built for Bitcoin mining — with substations, cooling systems, and long-dated energy contracts — are increasingly attractive for AI and HPC workloads, where demand for compute capacity has surged alongside the generative AI boom.

Bitcoin miner CleanSpark recently refocused on AI, switching to operating data centers after missing profit targets. Another miner, Keel Infrastructure, shut down all its US mining operations after revenue fell 50% in the second quarter.

Charles Edwards, founder of hedge fund and AI platform Capriole Investments, directly linked the hash rate decline to public miners' AI pivot on X.

"This is the least talked about, concerning Bitcoin development in 2026," he argued, noting that the trend has accelerated since April.

Separately, CryptoQuant analysis recently suggested Bitcoin sell pressure may be nearing exhaustion following a $4 billion drop in USDT market capitalization.