‘Survival Mode’ Engaged: Bitcoin Miners Grapple with Plunging Hashprice and Shifting Economics
Bitcoin miners are facing mounting financial challenges as the hashprice—a key profitability metric—continues to decline, pushing some smaller operations to the brink of shutdown. The hashprice, which represents the daily revenue per petahash per second (PH/s) of computing power, has dropped significantly, landing near $42/PH/s, down from over $62/PH/s just a few months ago in July.
This steep decrease is intensifying pressure on miners operating with tight margins. For many, particularly smaller and less energy-efficient operators, the current earnings are no longer sufficient to cover electricity bills and maintenance costs. As profitability evaporates, some are being forced to shut down their mining rigs entirely.
The downturn isn’t only hurting mining operations—it’s also reverberating through the broader ecosystem. Manufacturers of mining hardware and hosting providers are seeing a slump in demand. Orders for new ASIC machines have slowed, and service providers dependent on Bitcoin-related revenue are experiencing declining income.
In response to reduced customer demand, some mining hardware firms, including Bitdeer, have pivoted toward self-mining. By operating their own mining facilities, these companies aim to compensate for waning sales and maintain revenue streams. This strategic shift underscores the intensifying competition and shrinking margins in the post-halving era.
The halving event in April 2024 exacerbated the situation by cutting the block reward from 6.25 BTC to 3.125 BTC. This reduction in miner revenue occurred amid rising hashrates and high capital expenditures required to maintain and expand mining infrastructure. Once, in 2009, individuals could mine Bitcoin using just a CPU and earn 50 BTC per block. Now, only those with access to advanced ASIC hardware and low-cost electricity can remain competitive.
Amid these headwinds, some mining firms are exploring alternative revenue sources. A notable trend is the pivot toward AI computing. Several companies are repurposing their infrastructure to handle general compute workloads, particularly those related to artificial intelligence and cloud services. This move is seen as a hedge against the volatility of Bitcoin mining revenues.
Recent billion-dollar partnerships attest to this shift. In October, Cipher Mining locked in a $5.5 billion, 15-year deal to provide compute services to Amazon Web Services. Similarly, IREN secured a $9.7 billion contract with Microsoft to supply GPU capabilities—an indication that the future of some mining firms may lie beyond cryptocurrency.
Bitcoin’s price volatility has only compounded the sector’s difficulties. After peaking above $126,000 on October 6, BTC briefly plunged below $100,000—a drop of more than 20%. Market analysts attribute this decline to aggressive selling by long-term holders. Since late June, net outflows from this investor group have exceeded 1 million BTC, according to analyst Ed Engel.
Adding to the selloff was a wave of liquidations in leveraged positions on October 10, which accelerated the price fall and broke through critical support levels around $117,000 and $112,000. Markus Thielen, CEO of 10X Research, warned that the inability to reclaim these levels signals ongoing bearish momentum. His team now anticipates that Bitcoin may continue falling before a meaningful bottom materializes, projecting that a potential buying opportunity could still be weeks away.
The current landscape paints a stark contrast to the exuberance that characterized earlier bull cycles. What was once a booming industry with rapid infrastructure expansion is now grappling with existential questions. Miners must adapt or risk being pushed out of the market entirely.
To navigate these turbulent times, mining operators are increasingly focusing on energy efficiency and cost optimization. Some are relocating to regions with cheaper electricity or favorable regulatory environments. Countries with abundant renewable energy sources, such as hydro or geothermal power, are becoming attractive hubs for mining operations seeking to slash energy costs and reduce carbon footprints.
The shift toward green energy is also gaining momentum as environmental scrutiny of Bitcoin mining intensifies. ESG (Environmental, Social, and Governance) concerns are prompting both investors and miners to prioritize sustainability. Mining companies that can demonstrate a lower environmental impact may gain a competitive edge and attract institutional backing.
At the same time, consolidation within the mining sector is accelerating. Larger players with access to capital and efficient infrastructure are acquiring struggling smaller operators. This trend is reshaping the landscape, concentrating mining power into fewer hands and potentially raising concerns about centralization in the Bitcoin network.
Despite the short-term hurdles, some industry experts remain optimistic about the long-term viability of Bitcoin mining. They point to historical cycles of boom and bust, suggesting that current difficulties could ultimately lead to a healthier, more efficient ecosystem. As weak participants exit the market, those that survive may emerge stronger, leaner, and better positioned to capitalize on the next upswing.
The coming months will be critical for the industry. Whether through innovation, diversification, or strategic partnerships, miners must find ways to adapt to the evolving landscape. With the convergence of AI, cloud computing, and decentralized finance, some see an opportunity for mining infrastructure to play a broader role in the digital economy beyond Bitcoin alone.
In the meantime, the hashprice remains the key metric to watch. Until it rebounds or stabilizes, miners will continue operating in “survival mode,” navigating a complex web of economic pressures, technological shifts, and market uncertainty.