The Bitcoin mining industry is once again facing a significant challenge. With the Bitcoin price hovering around 20% below the average mining cost, mining profitability has fallen to a 14-month low. Daily mining revenue has fallen to around $28 million, nearly half of last year's peak.
The simultaneous combination of price adjustments and reduced transaction fees is rapidly deteriorating the profitability of miners. Market analysis estimates the average mining cost for major listed mining companies to be between $60,000 and $80,000. However, the current Bitcoin price is below this level, meaning many miners are operating below the break-even point.
This environment naturally impacts network metrics. The hash rate, which represents the total computational power of the Bitcoin network, has recently shown signs of slowing. This is because when profitability declines, less energy-efficient equipment is shut down first. While the decline in hash rate is partially mitigated by difficulty adjustments, it is interpreted as a signal triggering a restructuring of the industry in the long term.
Small and medium-sized miners, particularly in regions with high electricity prices, are feeling the pressure first. Some companies are scaling back operations or selling their Bitcoin holdings to secure cash. This could create additional selling pressure in the market in the short term. If coupled with ETF outflows, the possibility of increased volatility cannot be ruled out.
A notable change is the shift in business strategy among mining companies. Some mining companies, equipped with high-performance GPUs and large-scale power infrastructure, are converting their facilities to AI data centers. With the surge in demand for AI computing, existing mining infrastructure is being reimagined as a new revenue model. This shift is seen as more than a simple response to the recession; it represents a shift that fundamentally alters the very nature of the mining industry.
This deterioration in profitability has implications beyond a short-term price correction. The mining industry is a key pillar directly linked to the security of the Bitcoin ecosystem. If miners' financial soundness weakens, discussions about network stability will inevitably arise. At the same time, this could serve as an opportunity to improve the industry's efficiency. This could lead to the restructuring of inefficient facilities and the acceleration of large-scale and concentrated operations.
Ultimately, the key question is whether prices will recover. If Bitcoin's price steadily returns above mining costs, the industry could quickly return to normal. However, if the current negative margin situation persists, large-scale restructuring and business restructuring are highly likely to begin in earnest.
The Bitcoin mining industry is now on the brink of a fundamental shift, beyond a simple decline in profitability. Whether this downturn will be a temporary adjustment or a turning point that transforms the industry landscape will be determined by price movements and capital inflows over the next few months.
