Bitcoin Miners Are Abandoning BTC... And No One Is Talking About Why

Hello and welcome to Coin Bureau's official podcast channel.

My name is Guy and if you're seeking unbiased in-depth information about Bitcoin,

cryptocurrencies, Web3, and all manner of related topics, then you've come to the right place.

I hope you enjoy today's episode.

Bitcoin recently crashed into the $60,000 range creating all kinds of chaos.

Not only is this below key support levels set by the previous cycle,

but this has also put BTC's price in the danger zone for Bitcoin miners.

Many miners are now operating at break-even and some are even being forced to unplug.

The result is that Bitcoin's hash rate has dropped massively.

And this has investors everywhere asking questions about the future of Bitcoin mining.

Is this the start of a death spiral for the mining industry?

Or has BTC already bottomed and could this massive shock to the miners actually be the ultimate buy signal?

That's why today we're diving deep into the mining sector,

how it's been impacting Bitcoin and what it could mean for your bags.

My name is Guy and you're watching the Coin Bureau.

Now as I record this, BTC has pretty much been going down only for around 18 weeks now,

and is currently sitting in the mid $60,000 range.

This means BTC is below the last cycle top of around $69,000,

and this is a bigger deal than you might think because historically,

the previous cycle top has served as a key level of support.

Breaking below this level basically means we don't know how far BTC could fall from here.

But given how far BTC has already fallen,

it could be much lower by the time you're watching this video.

I hope I'm wrong.

Now obviously this has everyone worried about Bitcoin's future

and not just from an investment perspective.

Many are questioning whether Bitcoin miners are struggling to stay profitable

given BTC's big drawdown.

And as you've probably guessed, the answer appears to be yes.

Data from Antpool, one of the largest crypto mining platforms,

reveals how bad it is.

For context, Antpool shows a load of key data for a brand of mining machines called AntMinus.

And for the purposes of this video, you just need to know there are two main models,

the S21 series, the more common model, and the S23 series, the more advanced model.

What's scary is that the shutdown price for most S21 models is between $46,000 and $67,000.

In other words, if BTC's price falls into that range,

Bitcoin mining becomes unprofitable for most operators.

Thankfully, the shutdown price for the more advanced S23 models is between $36,000 and $38,000.

So we can probably breathe a great big sigh of relief then, right?

Well, maybe not.

According to some market analysts,

BTC could fall as low as $30,000, this bear market,

meaning that even the most advanced mining rigs will struggle to be profitable.

Whatever the case, this break-even crisis is a huge problem.

After all, if miners operating heavy-duty equipment aren't getting any real financial reward,

they'll either be forced to sell their BTC to stay afloat or they'll simply switch off.

Many of them could do both.

And as more and more feel the squeeze and decide enough's enough,

this means there will be far fewer miners processing transactions and securing the network.

Put differently, the blockchain will be significantly weakened,

which could drive BTC's price down even further.

That's exactly why this break-even crisis doesn't just affect Bitcoin miners.

It also affects users.

Now, as you might have heard, it's not just BTC's price that's been driving Bitcoin miners away.

If you've been keeping up with the headlines,

you'll know that some Bitcoin miners have been pivoting away from Bitcoin

and towards other areas such as AI and high-performance computing or HPC.

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Now, as the term suggests, high-performance computing refers to the powerful computing hardware

used for any extremely heavy or complex calculations,

like, for instance, AI data workloads.

And in case you forgot, lots of Bitcoin mining companies are building HPC infrastructure

to expand into the proliferating AI sector.

But why exactly is this?

Well, there are two reasons.

The first is one you'll probably know already,

and that's that there's more money in AI.

But what you may not know is just how much of a difference there is.

AI can reportedly offer Bitcoin miners up to 25 times more revenue per kilowatt hour

from what they'd earned by mining BTC, so it's no wonder many are making the switch.

The second reason is flexibility.

Put simply Bitcoin mining machines known as application-specific integrated circuits

or ASICs are, well, exactly that, application-specific.

They're designed to do one thing and one thing only,

perform the hashing calculations required to mine BTC.

The hardware literally can't be used for anything else.

However, the infrastructure used to run the ASIC machines can be.

Bitcoin mining operators are already hyper-vigilant about energy efficiency,

weather protection, cooling systems, and even geo-location.

This makes them a perfect fit for the rise of energy-intensive AI systems

that require this exact setup and big tech firms know it.

That's why the likes of Amazon, Microsoft, and Google have been making major deals

with Bitcoin mining firms to use their existing infrastructure

to expand their AI business operations.

But it's important to note that most Bitcoin miners are just adding AI and HPC

to their existing models, meaning they're not completely abandoning mining.

These include Mara Holdings, Riot Platforms, Hot 8, CleanSpark, and Hive Digital

to name just a handful.

However, some Bitcoin miners are fully pivoting to AI abandoning mining entirely.

One notable example is BitDigital, which recently announced it would shut down

its mining business in favor of AI and hoarding ETH.

Sacrilage.

Another example is BitFarms, which announced it is no longer a Bitcoin mining company

and is instead focused entirely on AI and HPC.

In fact, BitFarms even rebranded to keel infrastructure,

making sure to sever any remaining ties to Bitcoin.

Regardless of the extent of the pivot, though, the result is usually the same.

These Bitcoin miners have been selling large amounts of their BTC

to help fund the transition.

For example, Riot sold over 1800 BTC in December to raise $161 million,

which it used to help fund its move into data-stenter infrastructure.

And more recently, Kango offloaded over $4400 BTC

to raise over $300 million to repay a Bitcoin collateralized loan

and help fund its shift to AI.

At the same time, BitDigital sold its entire stash of over 1000 BTC

while BitFarms appears to be ready to do the same.

Needless to say, this is adding additional cell pressure

driving BTC's price down even further.

Now, you'll recall that BTC's price isn't the only thing

that's been forced downwards recently.

Something under the hood that's causing concern for miners

and investors alike is Bitcoin's falling hash rate.

That's because the hash rate recently fell below 1 zeta hash per second

for the first time since mid-September.

But what does this mean and, well, why does it matter?

Well, this is where things get a bit technical.

So, listen carefully.

In order to process a transaction on the Bitcoin network,

miners must solve complex mathematical problems.

These problems are generated by the encryption method

that secures the Bitcoin blockchain called SHA256.

The thing is, this encryption is so complex

that ASICs basically have to guess the answer

until one of them gets it right.

This process is called hashing and can basically be thought of

as the computational power that upholds the network.

The thing is, though, guessing the right answer to this puzzle

is much easier said than done.

And for perspective, the 1 zeta hash that I mentioned a moment ago

means Bitcoin miners are making around a 6 trillion guesses

at the network every single second,

which is truly mind-boggling when you stop and think about it.

Naturally, this requires a lot of computing power

and is why mining Bitcoin is so energy intensive.

So then, why did the hash rate fall?

The answer is BTC's price.

Because when BTC's price falls, so too does the profitability

of Bitcoin miners.

As we've already seen, this can cause miners to go offline,

meaning there's less computing power supporting the network overall.

In other words, the fewer miners there are, the lower the hash rate.

That said, though, this fall in hash rate wasn't driven solely

by BTC's price.

There's also been the sharp rise in energy costs

which have significantly increased mining overheads.

Since mining Bitcoin is so energy intensive,

even the slightest rise in electricity prices

can have a major impact on the profit margins of Bitcoin miners.

Hypothetically, this means that even if BTC's price remains stable,

energy costs alone can force miners offline.

In this case, the combination of rising energy costs

and a lower price for BTC has caused a huge number of miners to exit

pushing the hash rate down significantly.

I'd also be remiss if I didn't mention the severe winter storm

which recently took multiple US Bitcoin mining operations offline.

Basically, an onslaught of snow, ice and freezing temperatures

caused power outages everywhere, forcing many Bitcoin miners to power down.

Now, most of these miners have likely switched back on again,

but not before the damage was already done.

There is a silver lining, though, and that's that this lower hash rate

has pushed Bitcoin's mining difficulty down as well.

For context, difficulty is a measure of how hard it is

for miners to solve a block to find that magic number

that lets them add the next block of transactions to the blockchain.

The network adjusts this difficulty every 2016 blocks,

or roughly every two weeks, to maintain a block time of 10 minutes per block.

If the difficulty didn't adjust, block times would vary

and the predictable issuance of BTC would be, well, not so predictable.

To put things into perspective, in early February,

Bitcoin's lower hash rate caused its difficulty level

to drop by over 11% in a single day.

This makes it the worst drop since 2021

when China banned Bitcoin mining and forced many miners offline.

In fact, the network difficulty plunged 27% in a single adjustment period,

that two week window I mentioned earlier.

Now, some analysts have pointed out that this 27% decline

is the 10th largest difficulty drop in Bitcoin's history.

When you consider that Bitcoin has been chugging along since January 2009

and has seen all kinds of volatility along the way,

both in BTC's price and Bitcoin's hash rate,

then you quickly see why this is such a huge deal.

Now, by this point, you're probably wondering

whether we should be concerned about the stability and security

of the Bitcoin network.

Well, not necessarily.

You see, it's worth remembering that the recent difficulty drop

is actually a built-in feature of the protocol.

Bitcoin is literally hard-coded to adapt in order to maintain

long-term network stability.

Even so, historically, sharp drops in Bitcoin's difficulty

tend to reflect economic stress on miners,

whether that's a falling BTC price,

rising energy costs, or profit margins getting squeezed.

And, as we've seen,

all of these pressures have been in play at the same time,

which explains why the hash rate decline was so pronounced.

And to make matters worse,

BTC's price is still showing signs of weakness,

suggesting there's no immediate relief for miners on the horizon.

There's also the question of security.

A lower hash rate does, in theory,

make Bitcoin more vulnerable to attacks like a 51% attack,

where malicious actors could attempt to gain control of the network.

In practice, though, there is still an ungodly amount

of computing power securing Bitcoin,

even after dipping below one zeta hash per second.

So, any bad actor would need to deploy an enormous amount of specialized hardware and energy,

not to mention billions if not trillions of dollars,

just to attempt such an attack.

So, while the risk exists in theory,

in practice, it remains extremely unlikely

if not outright impossible.

And just to put any lingering doubts to rest,

Bitcoin's hash rate has since rebounded above one zeta hash per second again,

meaning any brief window of opportunity for bad actors

has effectively been slammed shut.

That said, there is a flip side that often gets overlooked.

Events like this can actually be healthy for Bitcoin in the long run.

That's because the miners that drop out first tend to be the weakest or the most over leveraged.

To be blunt, these guys simply don't provide the kind of resilience Bitcoin needs

to thrive over the decades.

Over time, they're replaced by more efficient and better capitalized mining setups.

Meanwhile, the remaining miners can earn higher rewards in the short term

because lower difficulty means less competition for each block.

With fewer miners chasing the same block reward,

profitability can actually improve.

In other words, a lower difficulty can potentially be quite lucrative.

Naturally, this then incentivizes new miners to enter

or old ones to switch their machines back on,

which causes the hash rate to recover and stabilize again.

It's an elegant, self-preserving system.

The catch, however, is that during periods of mining capitulation,

struggling operators are more likely to become forced sellers of BTC just to stay afloat.

This can result in sudden waves of selling pressure hitting the market,

potentially pushing prices even lower in the short term.

So then, all of this begs the question of what's next for the Bitcoin mining industry.

Well, in our honest opinion, the recent drawdown in Bitcoin's hash rate

is a bit of a nothing burger.

Yes, it reflects real weaknesses in mining economics like we discussed earlier,

but the reality is that nothing about Bitcoin itself has really changed.

It's still just as strong and just as secure as it was before.

From our perspective, the bigger story may be the changing shape of the mining industry itself.

With more major firms gradually pivoting towards AI and high performance computing infrastructure,

it's possible this could create a sort of power vacuum,

giving smaller mining companies a chance to gain market share.

Put simply, the larger mining players of today may not be the dominant players of tomorrow.

Incidentally, that shift could also ease some centralisation concerns

since smaller companies typically don't have the same large-scale mining farms

that bigger entities do and which give them such an advantage

or make them as appealing for AI and HPC.

With more companies using more modest setups,

this could result in Bitcoin's hash rate and BTC's supply

being more evenly distributed and more decentralized.

Well, unless larger companies simply end up acquiring smaller ones.

Naturally, though, this begs the question of whether Bitcoin miners could see any relief anytime soon.

Well, as it happens, many mining companies are reducing their overhead costs

by powering their mining operations with green energy rather than with fossil fuels.

As a fun fact, a recent report revealed that more than 57% of Bitcoin mining is now done using renewable energy.

Back in 2021, that number was just 34%.

Now, this isn't just great news from an environmental perspective,

but also from a structural standpoint.

Setting up their own green energy infrastructure could be exactly how Bitcoin miners sidestepped the rising energy costs

that have forced so many miners out of business.

And logically, this could result in more miners securing the network

making significant drops in hash rate far less likely to occur.

This will not only help the Bitcoin network stay more secure,

but could also result in less cell pressure, too,

since more miners can accumulate BTC rather than being forced to sell.

So then, what does all of this mean for BTC's price?

Well, the good news is that minor capitulation has historically marked the cycle bottom.

The fact that these troubles have arisen around the same time that BTC has roughly fallen to support levels

around its previous cycle top suggests that BTC may not fall much further from here.

However, this doesn't mean a recovery rally is likely anytime soon.

If BTC has found its cycle bottom, and that's a big if,

then we're more likely to see its price-chop sideways for several weeks and possibly months.

But until the hash rate properly stabilizes,

we can probably expect to see more downside volatility.

How low BTC will go from here, though, is anyone's guess.

That said, some investors have argued that BTC's recent sell-off has been massively overblown.

Case in point, analysts from Bernstein have called the recent pullback,

quote, the weakest bear case in the asset's history.

Adding that, quote,

The current Bitcoin price action is a mere crisis of confidence.

Nothing broke, no skeletons will show up.

Bernstein also maintained their target of $150,000 for BTC,

although we feel that may be a tad optimistic for the time being.

It seems pretty clear at this point that we're now at the mercy of the bear market,

so blasting off to new all-time highs doesn't exactly seem realistic, at least for a while.

Still, it's nice to see some positivity during times like these,

and let's just hope it doesn't mean we still have lower to go.

But what do you think, folks?

How do you feel about the Bitcoin mining industry in 2026?

Is BTC about to go lower, or will it rock it to new all-time highs before you can say Satoshi?

Let us know your thoughts in the comments below.

If you want to see how institutions feel about crypto, then check out the video right over here,

and if you want to see what other challenges Bitcoin could face in 2026,

then check out the video over here.

Okay, thank you all for watching, and I'll see you again soon.

This is Guy, signing off.

Hello, Guy again.

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Okay, that's all for this episode.

Thank you for listening, and see you again soon.