Bitcoin Mining is Dead. Long live the miners!

Bitcoin just came off its worst ever week.

The Epstein Files were released on January 31, 2026, batch two, and it implicated a few Bitcoiners, as well as early Bitcoin companies.).

It now sounds like an ominous sign. On Thursday, the price of bitcoin plummeted by 21%, losing $16,000 in one day. It went from $76,000 down to $60,000. 

Bitcoin owners were obviously gruesomely affected, but Bitcoin miner’s, already struggling with historically low revenue, had to endure even more pain.

Bitcoin hashprice – a measure of mining revenue in either USD or BTC per unit of hashrate – hit an all-time low of $28.90/PH/day, according to Bitcoin mining data platform Hashrate Index. It means 1 petahash (roughly 5 new ASIC miner) of hashrate would only net you 28 dollars 90 cents.

The daily wages of a bum are higher than those who panhandle.

There’s little surprise that Bitcoin’s difficulties experienced 6 negative adjustment (out 7 in total) over a three-month period between November 12, 202025 and Feb 7, 2026. The only positive adjustment occurred on Christmas Eve, at 0.04%. Last time there was a long string of changes like this? 2011.

2011, y’all – when early tinkerers were mining with the computing power equivalent of a toaster compared to modern ASIC miners.

Bitcoin’s anemic value isn’t the sole factor that affects difficulty. Bitcoin miners are also pivoting to AI, and they are starting to decommission their ASIC fleets to make room for The Next Big Thing™.

The economic strain that miners face right now is a good indicator of the future for an industry where the underlying commodity has been in a downward trend over a sufficiently long timeframe. In other words, the trend of hashprice to zero is a good indicator for Bitcoin.

But also, nothing bad. Nothing bad either.

Blockspace for sale. Once used.

Examine the Bitcoin mining sector today before we make any predictions.

As I mentioned earlier, the hashprice trend is to zero. This is due to a combination of Moore’s law – as semiconductors improve, so too does the energy efficiency of ASIC miners, meaning miners can produce more hashrate with fewer electrons, which puts pressure on Bitcoin’s difficulty and reduces the rate of mining rewards per unit of hashrate – and the Halving.

By 2036, the block subsidy is expected to be zero. The block subsidy will eventually reach zero. 

Bitcoin miners would be better off praying for high transaction fees. Even here the trend works against them. Right now you can have a virtual byte transaction verified for as little as 1 satoshi (sat/vbyte). 

Bitcoin adoption has reached an all-time peak, but the mempool remains a ghost town. SegWit’s and Taproot’s data-efficient upgrade is a big part of it, but Bitcoin has also scaled as Hal Finney predicted.

It is ironic that the only on-chain usage of real value in the past three years was from ordinals and inscriptions. These were, however, adopted by many Bitcoiners. “shitcoiners” From the worlds of Ethereum, Solana and other blockchain technology.

Let’s put away all the moralizing and kvetching for a second. You can love monkey JPEGs or dislike them, but it doesn’t really matter. They were great for the miners. And they boosted block rewards both before and after 2024.

The market has died, however, and no Layer 2 project or other use cases for blockspace have filled in the void they created. It would not be prudent to count on these platforms to generate meaningful fees within 10 years, given the failure of Layer 2 to gain adoption during the ordinals hype. Hope they do! It’s not a bet I would make. 

In the age AI, people may start to use Bitcoin timestamps for content and identity attestation – or some other, unforeseen use of blockspace will pop up – but again, I’m not holding my breath. 

AI is most likely to produce at least a few positive externalities that Bitcoin miners can enjoy, even if there are also some negatives.

Coming domin(AI), the black pill

Bitcoin has not been the main trend for Bitcoin mining in the past year.

The largest Bitcoin miners in the world – Core Scientific, Riot, IREN, Cipher, CleanSpark, Hut 8, TeraWulf, among others – have started swapping ASICs for GPUs to cash in on the LLM gravytrain.

It’s almost a retrograde movement, except the GPUs aren’t producing nonces for miners as they once did  – they’re running AI or high-performance computing loads. 

Not sure how many Bitcoiners listened through this recording or considered its implications. Publicly traded Bitcoin miners – the ones making these pivots, or at least the ones making the most noise about them – account for roughly 40% of Bitcoin’s hashrate. They’re also trying to figure out how to turn every basis point into computing power for Claude ChatGPT Gemini etc. 

It’s all about dollars and cents. It is possible to monetize megawatts at much higher amounts than Bitcoin mining. I’m sorry if this shatters your illusions about the altruistic miners who are hashing the network to defend it against the dastardly criminals. 

It’s actually a positive thing. It’s also a negative for the hashrate, and therefore for profitability. It means that everyone gets more satoshis, and more importantly it removes a large group of Bitcoin mining companies who enjoy a lopsided advantage in terms of operations and finances.

I am specifically referring to public miners who have access to the capital markets. This allows them to scale up their hashrate aggressively even if it is not profitable. You’re not making enough money from mining to pay for your expenses? No problem – just dilute your shareholders! Since years, Bitcoin public miners issued equity and sold it on the open market. They used the proceeds from the sale to raise their operation costs, expand faster than private bitcoin miners, and shore up the cost of operations. 

Bitcoin hashrates have grown faster than expected. Bitmain, when China was the dominant mining country, drove rapid hashrate expansion with self-mining as well as via proxies through its spoils systems. The rapid growth of public mining has the same impact as the China Mining Ban 2021, which shifted the hashrate from China to the U.S.

The promise of an AI payout is too attractive for companies, and this computing application will force these miners to quit the game. This shift is as drastic as the Great Hashrate Migration that followed China’s ban on Bitcoin mining in 2021.

Megaminer Disintermediation Whitepill 

The change that’s coming isn’t going to be a bad thing. The whitepill is the one.

As mega-miners fade into the background, the smaller and medium-sized miners, those who operate on the margins, on the outskirts, and who have little chance of converting their operations into another form of data center, will thrive – or at least survive. 

The majority of the hashrate in 10 years will come from the Bitcoin miners. Not the publicly listed companies, who can mine regardless of profitability. The miners of 2036 will have to be nimble, clever, and scrappy. The miners will be able to make their operation more cost-effective by recycling heat, mining on off-grid oil and gas fields, wind farms or solar arrays or integrating power plants.

Bitcoin miners who run off energy production assets like nuclear power plants and natural gas stations to soak up surplus electricity when there’s a boom in production will probably be one of the last groups on that list. 

It may seem obvious, but this is assuming that the block rewards will be healthy enough to support hashrate, even at margins. Returning to the math we did in the second part, Bitcoin will have to reach $272,000 or more to equal the block subsidy. 

It would be ideal if transaction fees accounted for more than 1 percent of block subsidies. But this is not guaranteed. The miners that use the least amount of energy are still going to be mining, even if bitcoin isn’t completely worthless.

ASICs’ energy efficiency will be able to help with overall profitability. But only up to a certain point, because the watt-per terahash rate is increasing slowly and it will plateau out at some future date if the trajectory continues. 

Last five years were the exception and not the rule

This is all good news, since it eliminates the major players in the Bitcoin-mining industry. They are therefore no longer a threat to the Bitcoin network.

This is a clear case of centralization. They are closely scrutinized and legally compliant companies that will bow to Uncle Sam when it threatens the business. (Lest we forget, MARA (formerly, Marathon Digital Holdings) started mining OFAC-compliant blocks – blocks that censored any transaction connected to an OFAC-sanctioned Bitcoin wallet – in 2021, despite the fact that there was no law or legal precedent to mandate such an action).

Bitcoin’s permissionless, censorship resistant ethos is threatened by Bitcoin mining pools. This threat may be less obvious. Mining pools are largely based on a payout system called Full-Pay-Per-Share (FPPS). The hashprice is used to calculate how many blocks are mined by the pool. The pool takes on all the mining risk, the opposite of Slushpool’s (now Braiins pool) pay-per last-n share (PPLNS), which was pioneered by Slushpool in 2011. They act as an insurance company for the miners, guaranteeing their income, regardless of how many bitcoins the pool actually mines. The pool can pocket any difference if it mines 9 blocks a day, and they are responsible for the payouts of those 9. If they only mine 8, they eat up the difference. 

It will be increasingly hard for FPPS to guarantee payouts while covering the risks of mining. The situation becomes worse if the transaction fee starts to make up even a minimal amount of revenue. FPPS pool calculates hashprice by using a base block subsidy and a rolling-average of transaction fees for a period. What happens if an FPPS pools hashprice is based on the assumption that transactions are 10% of total mining revenue, yet its blocks only account for half that amount?

Pool solvency becomes a mounting concern, and so FPPS pools will have to either adapt, or another model – either old or new – will take its place out of necessity. 

It is a positive, as it eliminates an additional weakness for Bitcoin. Foundry is a U.S. mining pool that currently mines about 1/3 of Bitcoin blocks. What is your opinion if you were to tell the U.S. Government that Foundry should censor some transactions and make a list of white and black Bitcoin wallets approved by or sanctioned? 

We might see self-mining, PPLNS, or similar payouts dominate if FPPS disappears. This should reduce the risk and market share for large FPPS pool. To be intellectually honest (and the counterfactual for this hypothetical), as Bitcoin mining becomes less stable, only a few pools will dominate market share, because they have more sway and can make their payout promises. 

Bitcoin mining is a bad business. That’s a positive thing. The dwindling block subvention and hashprice are pushing mining towards the margin and the lowest possible cost of energy, and operators will only be able to scale if they exercise caution and diligence. Bitcoin mining is likely to be more widely distributed in ten years.

It’s entirely possible, then, that we look back on the mega-mining meta that became popular in the U.S. after the China Mining Ban as an aberration rather than the norm – another product of a fiat-warped, zero-percent interest rate policy economy that was doomed to expire when the accounting stopped making sense. 

Don’t miss your chance to own The 2036 Issue — featuring articles written by many influential figures in the space pondering the challenges of the next decade!

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