Bitcoin mining is no longer profitable: what to do for those who cannot pivot to AI

Bitcoin miners hold about 1% of the total mined coins, but these reserves simply sit idle on balance sheets, generating no income. This conclusion comes from a new report by Wintermute: the market maker believes miners are missing a key survival tool at a time when Bitcoin mining no longer generates the profits it once did.

Why mining is becoming unprofitable

Every four years, the Bitcoin network undergoes a halving, where the reward for mining a block is cut in half. The periods between halvings are called epochs — and the network is currently in the fifth one.

For mining businesses to remain profitable after each halving, the price of Bitcoin must at least double within four years.

In previous epochs, the price increased 10–20 times, so profitability was not a problem. Now, during a comparable period, Bitcoin has increased only 1.15 times — which is far from enough.

Miners also cannot compensate for losses through transaction fees. These revenues are irregular and represent only a few percent of miners’ total revenue. Short bursts of network activity cannot replace a stable income source.

As a result, miners’ margins are currently at the same low levels that in previous cycles were seen only during the peak of bear markets.

In simple terms: miners are operating with the same profitability as in the worst periods — but now this has become their normal condition rather than a temporary crisis.

Pivot to AI: expensive and not available to everyone

One potential solution is repurposing infrastructure for artificial intelligence workloads.

For years, miners built large facilities in regions with cheap electricity — precisely the infrastructure now urgently sought by the AI industry.

Connecting new data centers to the power grid in the U.S. can take 5–10 years, making existing mining infrastructure a ready and scarce resource.

The market has already priced in this shift. Facilities valued at $1–7 per watt as Bitcoin mining farms can reach around $18 per watt once repurposed for AI computing.

A recent benchmark deal involved Canadian miner HUT 8 partnering with Google and Anthropic, providing AI computing infrastructure and receiving a significant market revaluation.

However, transitioning to AI requires major investment and suitable facilities, making it primarily a path for large players with capital.

Notably, mining giant MARA Holdings filed documents with the U.S. Securities and Exchange Commission (SEC) indicating plans to sell part of its Bitcoin reserves to finance the transition.

Bitcoin on the balance sheet: idle capital

For miners unable to pivot to AI, Wintermute highlights another, much simpler reserve: Bitcoin sitting on company balance sheets.

Combined miner holdings — about 1% of all mined coins — currently generate no income.

Analysts describe this as a “legacy of the HODL era” and consider it a structural inefficiency the industry can no longer afford.

There are multiple ways to generate yield from these reserves:

Active strategies
Working with derivatives such as:

• covered call options
• cash-secured put options
• more advanced trading strategies

These approaches can generate higher returns but require expertise and active management.

Passive strategies
Depositing Bitcoin into decentralized lending protocols to earn a fixed yield.
A simpler example includes the recently launched WBTC market on the Wildcat platform.

“Miners who treat their Bitcoin reserves as a productive asset rather than a passive store will gain a structural advantage before the next halving,” Wintermute concluded.

The fifth epoch has forced the Bitcoin mining industry to choose between:

• rebuilding infrastructure for AI, or
• learning to generate income from existing Bitcoin reserves.

Both paths are available, but for different players: the first requires capital and infrastructure, while the second is accessible to almost any large miner today.

AI perspective

From a machine-analysis perspective, a curious paradox emerges.

The very developments the Bitcoin industry once celebrated — ETF approvals, corporate treasury adoption, and institutional capital inflows — have become key drivers of the miners’ crisis.

Institutional capital has turned Bitcoin into a more stable, “mature” asset, which in turn has eliminated the explosive price growth that previously sustained the economics of Bitcoin mining.

See also: "Nvidia-backed startup plans to mine Bitcoin in space this year"

#Mining #AI

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