The decline in Bitcoin mining profitability and rising costs are forcing companies to seek new ways to sustain their business.
This is reported by Finway
Current Challenges for Miners and Ways to Overcome Them
The current Bitcoin mining market is experiencing a difficult period: the reduction in block rewards and the increase in electricity costs are negatively impacting the industry’s profits. According to Wintermute’s analysis, many companies are facing the issue of declining profitability, leading to the need to search for alternative sources of income. Some players have already begun selling part of their crypto assets or are considering options to transition to servicing infrastructure for artificial intelligence. This could become a key direction for enterprises that possess powerful energy and computing resources in regions with low electricity costs.
“Wintermute noted that miners have built large energy and computing capacities in regions with cheap electricity over the years. Such infrastructure may prove to be in demand for AI tasks, as similar capacities are difficult to replicate quickly.”
At the same time, analysts emphasize that transitioning to a new type of business requires significant investments and could represent a radical change for companies that have traditionally focused on cryptocurrency mining.
Potential for Using Bitcoin Reserves and Strategy Shift
According to Wintermute’s estimates, miners currently control about 1% of the total Bitcoin supply. This coin accumulation strategy is a legacy of the so-called HODL era, when the main goal was simply to hold onto acquired assets. However, in the current market conditions, experts believe that miners should more actively utilize their reserves as working capital.
In particular, companies can employ various financial instruments, such as derivative strategies: covered call options or secured put options, which would allow them to monetize market volatility. There is also the option of placing Bitcoins in lending protocols to earn additional interest income. This would provide an advantage ahead of the next halving, according to Wintermute analysts.
The analytical report emphasizes that for the first time in the last four years, the price of Bitcoin has not doubled after the halving, as it had previously. Such growth had previously helped to offset the decline in miners’ revenues. The market for transaction fees remains unstable and does not provide the necessary level of compensation for the reduced rewards.
Additional pressure on the industry is coming from rising electricity costs. Wintermute predicts that the current situation could serve as a kind of “healthy shake-up” for the industry, contributing to increased efficiency in the long term.
As a reminder, according to VanEck CEO Matthew Sigel, Bitcoin miners remain a promising sector due to the development of artificial intelligence.
