Bitcoin miners can’t catch a break — and now they’re entering what the industry is grimly calling the “chill zone.”
This week, hashprice — a key measure of profitability for Bitcoin miners — fell below $50 for the first time since April, according to TheMinerMag. If current projections hold, that figure could drop to below $46, a level not seen since Bitcoin traded near $90,000.
It’s a cruel irony: Bitcoin sits above $110,000, yet miners are making less money than when it was $20,000 cheaper.
Figures like those are near to what’s considered a worst-case scenario for miners. Already in April, the situation was dire. Back then, hashprice had fallen to $40, a level considered by TheMinerMag to be at or below break-even for many mining operations.
“Most miners were looking at $40 as their bear case,” Nick Hansen, CEO of mining outlet Luxor, previously told DL News, admitting that he had spoken to many mining companies and their response was: “we’re not sure what we’re going to do.”
None of this is new, however.
Bitcoin mining has been dealing with a severe drain of profits for some time. There’s two reasons: the 2024 halving slashed block rewards in half, which left miners increasingly dependent on transaction fees. A lack of onchain activity, however, means those fees have all but evaporated.
For instance, in September, transaction fees contributed less than 0.9% of total Bitcoin mining rewards, “continuing a trend of historically low fee activity since the halving,” wrote TheMinerMag.
The situation is existential. Miners are the players that keep Bitcoin’s security afloat, and if they struggle to make money and stay online, then the entire protocol could be at stake.
Three factors
Three factors determine mining profitability.
One is the price of Bitcoin, second is the difficulty of mining — or how much computing power the network requires — and third is transaction fees.
Right now, two of those three are working against miners.
Network hashrate — the total computing power securing Bitcoin — has climbed above 1.1 zetahash per second, up 10% in just three weeks. More miners competing for the same rewards means everyone’s slice gets thinner.
Another 6% difficulty increase is expected in six days, further squeezing margins, said TheMinerMag.
Moreover, without fees to cushion falling subsidies, miners are trapped between rising costs and shrinking revenue.
The AI pivot
What can miners do? Well, some are switching from a pure mining play over to AI.
For instance, CleanSpark, once a vocal “Bitcoin-only” miner, just expanded its credit line by $100 million explicitly to invest in high-performance computing infrastructure for AI workloads.
Additionally, Cipher Mining signed a $3 billion deal with Fluidstack to convert 168 megawatts of capacity from Bitcoin to AI and cloud computing.
“The dual-track mining model is fast becoming the new normal,” TheMinerMag noted.
VanEck had already predicted the shift back in 2024. Assuming the 12 major publicly traded Bitcoin miners dedicate 20% of their energy capacity to AI computation by 2027, they could bump their average yearly profits to almost $14 billion.
“The synergy is simple: AI companies need energy, and Bitcoin miners have it,” wrote Matthew Sigel, VanEck head of digital assets research in an August blog post.
