The Bitcoin mining industry is facing serious challenges ahead of the next halving, which will take place in 2028. Fred Thiel, CEO of MARA Holdings, emphasized that only those companies that can control their own energy resources or adapt their business to artificial intelligence (AI) and high-performance computing (HPC) technologies stand a chance of remaining competitive after the block reward reduction.
This is reported by Finway
Challenges for Miners and the Role of Energy Independence
According to Thiel, the industry is becoming increasingly competitive and harsh. While companies could previously rely on connecting to the general power grid, now, for survival, they need either to own energy production facilities or collaborate with such producers. Otherwise, businesses risk exiting the market due to rising costs and decreasing profits.
“Bitcoin mining is a zero-sum game. When more players add capacity, it becomes harder for everyone. Margins are compressed, and the bottom line is the cost of energy,” Thiel said.
The expert highlights that the mining market is becoming more mature, and competition is becoming even tougher. Equipment manufacturers have started launching mining operations themselves as demand for purchasing equipment from other companies declines. The increase in global hash rate leads to reduced revenues for most players.
Market Transformation: AI, HPC, and New Monetization Approaches
In response to market challenges, large mining companies are changing their strategies. Some are expanding their activities towards artificial intelligence and high-performance computing, while others are building their own energy capacities to reduce operational costs. As Thiel notes, MARA aims to remain among the leaders in the lowest production costs, which will allow it to survive periods of intense competition when most players will be forced to scale back operations.
In 2028, the Bitcoin block reward will decrease to just over 1.5 BTC, raising questions about the effectiveness of traditional mining models under current market conditions. Thiel emphasizes that Bitcoin was created with the expectation of gradually replacing subsidies with transaction fees, but this has not occurred. If the price of Bitcoin does not consistently rise by 50% or more each year, the economics of mining risks becoming unprofitable after 2028, and the situation will only worsen by 2032.
Currently, spikes in transaction fees caused by events such as the release of Ordinals or inscriptions are short-lived and do not compensate for the reduction in block rewards. According to Thiel’s forecasts, the future may bring new monetization approaches, such as pre-reserving block space by banking institutions, but such mechanisms have not yet been implemented.
Fred Thiel concluded that by 2028, only those who own energy resources or collaborate with energy companies will remain in the market. The days of miners who are simply connected to the grid are already coming to an end.
MARA is demonstrating record financial results: in the third quarter, the company reported $252.4 million in revenue, which is 92% higher year-over-year. Net profit amounted to $123 million, whereas a year ago the company recorded losses. MARA is actively implementing a strategy to integrate its mining business with artificial intelligence: the first AI servers have already been deployed in Texas, a partnership has been established with MPLX LP — a subsidiary of Marathon Petroleum Corporation, and a controlling stake in Exaion, a French subsidiary of EDF, one of the largest producers of “clean” energy in the world, has been acquired.
Earlier, Fred Thiel emphasized that investments in AI infrastructure are already yielding tangible and measurable results for the company.