Bitcoin miner, can't hold on any longer?

Author: Prathik Desai

Original Title: The Miners’ Mirage

Compiled and organized by: BitpushNews

The apocalyptic rhetoric that has been prevalent on crypto Twitter recently must have long since tired you. But what is even more intriguing is the cognitive dissonance in the market: some are eagerly writing obituaries for a bull market, while others casually view it as cyclical ripples. To be honest, this scene is nothing new—there's never a shortage of self-justifying narratives in the market. Certain signs indicate that this time might be different.

Since the launch of the Bitcoin ETF, it has recorded a net outflow of $1 billion for the first time in three consecutive days; the funding rate for BTC has turned negative; the sentiment of “buying the dip” has mostly become a meme on crypto Twitter.

However, historically, BTC has also experienced multiple pullbacks of 25%-30%, yet set new all-time highs in the following months. This time, who can be sure which theory will become reality?

However, in the field of cryptocurrency, there is a group that does not rely on emotions, astrology, or other blind theories. The behavior of a certain type of market participant cannot be misread. They are the initial participants on the Bitcoin blockchain: miners.

After U.S. President Donald Trump announced the first round of reciprocal tariffs against Asian countries, including China (where most mining machines come from), miners went through a difficult period.

However, their economic reality is mainly tied to simple mathematics, which includes the halving conditions written in the Bitcoin white paper over fifteen years ago.

This article will analyze the current state of miners' profitability - as BTC prices plummet, their income is being squeezed.

The financial situation of BTC miners is quite simple: they rely on fixed protocol income to survive, while facing fluctuating expenses in reality. When the market is volatile, they are the first group to feel the pressure on their balance sheets. Their income comes from selling the mined BTC, while operational costs mainly consist of the electricity required to run heavy computing.

I tracked the fees paid to them for online payments, the costs required to earn this income, the remaining profit after deducting cash expenses, and the portion they can actually take home after accounting.

In short: Currently, with BTC trading levels below $90,000, the mining industry is in distress and far from thriving. Over the past two months, the average weekly income of miners has decreased by 35% from $60 million to $40 million.

Next, let's dive deeper into the data.

The income from Bitcoin is mechanical, set by the protocol code.

The mining reward for each block is 3.125 BTC, with an average block time of 10 minutes, producing about 144 blocks per day. This means approximately 450 BTC is mined daily. Over 30 days, global BTC miners mine a total of 13,500 BTC, which is valued at around $1.2 billion based on the current BTC price of approximately $88,000. Once allocated to a record 1,078 Exahashes per second (EH/s) of hash power, this $1 billion cake would translate to just 3.6 cents a day per Terahash in revenue. This is the entire economic foundation for securing a $1.7 trillion network.

In terms of cost, electricity is the most important variable, varying by region and mining machine efficiency.

If you use modern mining machines, such as the S21 level devices, which consume 17 joules per terahash and have low electricity prices, you can still maintain cash profits. However, if your mining rigs rely on outdated equipment or face higher electricity prices, the cost of every hash you calculate increases. At the current hash price (affected by network difficulty, Bitcoin price, block subsidies, and transaction fees), an S19 mining machine can barely break even at an electricity price of $0.06 per kilowatt-hour. If difficulty increases, prices drop slightly, or a heatwave drives up electricity costs, the economic situation will further plunge into losses.

In December 2024, CoinShares estimates that the cash cost of producing 1 BTC for publicly listed mining companies in the third quarter of 2024 will be around $55,950. Today, the University of Cambridge estimates the cost to be about $58,500. Actual mining costs vary by miner.

The largest publicly traded Bitcoin mining company, Marathon Digital, has an average energy cost of $39,235 for mining 1 BTC in the third quarter of 2025. The second-largest listed mining company, Riot Platforms, has a cost of $46,324. Despite the BTC trading price dropping 30% from its peak to $86,000, these mining companies are still thriving. However, this is not the whole picture.

Miners also need to consider non-cash items, including depreciation, impairment, and equity incentives. These items collectively make mining a capital-intensive business. Once these factors are taken into account, the total cost of mining one BTC can easily exceed $100,000.

MARA uses self-operated and third-party hosted hardware for mining. Due to the use of all equipment, it has to pay for electricity, account for depreciation, and reserve hosting fees.

A rough estimate indicates that the total mining cost for each BTC exceeds $110,000.

CoinShares estimates that the total mining cost will be approximately $106,000 in December 2024.

On the surface, the mining industry appears robust—cash profits are substantial, accounting profits are expected, and the scale of operations allows for easy financing. However, when you broaden your perspective, you will understand why an increasing number of miners choose to hold the BTC they mine, or even purchase more BTC from the market, rather than selling.

Strong miners like MARA are able to cover costs because they have ancillary businesses and can access capital markets.

However, many other miners may fall into losses with just one difficulty adjustment.

Putting all this together, there are two breakeven scenarios coexisting in the world of miners:

The first scenario is that industrial miners operate with an efficient fleet of mining machines, cheap electricity, and a light capital balance sheet. For them, the BTC price can drop from $86,000 to $50,000 before their daily cash flow turns negative. They earn over $40,000 in cash profit for each BTC they mine today, but whether they can squeeze out any accounting profit at current price levels varies among miners.

The second scenario is that once you consider depreciation, impairment, and equity incentive costs, the remaining miners will find it difficult to maintain above the breakeven point.

Even if you assume the conservative total cost of producing 1 BTC is between $90,000 and $110,000, this means that many miners are already below their economic breakeven point. They can continue mining because their cash costs have not been breached, but their accounting costs have been breached. This may encourage more miners to hold their BTC rather than sell it now.

As long as the miners' financial situation maintains a positive cash flow, they will continue mining. At a price of $88,000, the system appears stable, but this only holds true if miners do not sell their BTC. Once BTC drops further, or miners are forced to liquidate their holdings of BTC, they begin to approach their breakeven point.

Therefore, although the price crash will continue to affect retail investors and the trading community, it is currently unlikely to harm miners. However, if miners' access to capital becomes more restricted, this situation could have a more severe impact on mining operators. At that point, the flywheel effect will be interrupted, and miners will need to double down on developing their auxiliary businesses to survive.