Wintermute Declares Traditional Bitcoin Mining Model Obsolete - ForkLog: cryptocurrencies, AI, singularity, future

# Wintermute declares that the traditional Bitcoin mining model is outdated

Bitcoin miners are increasingly facing losses due to declining profitability. To survive, they will need to either switch to AI hosting or learn to manage Bitcoin reserves as working capital, according to Wintermute.

Structural Crisis in the Business Model

For the first time in a four-year cycle, digital gold has not yielded double-digit returns, which usually offset income drops after halving. The gross margin peak coincided with levels previously typical of a bear market bottom.

Fees are unable to cover costs—they amount to about 1% of total company revenue. Miners are also under continued pressure from consistently high energy costs.

Daily transaction fees for miners and the share of fees in their total income. Source: Wintermute ## Passive Holding as a Legacy of the HODL Era

According to Wintermute, miners collectively control about 1% of the total Bitcoin supply. Analysts refer to this as the “legacy of the HODL era,” noting that the full treasury management toolkit remains largely unused.

Traditionally, yield-generating tools in the crypto market were limited to staking and the DeFi sector. However, experts have proposed a broader toolkit for miners:

• Monetizing market risk through derivatives;
• Selling covered call options;
• Collateralized cash-backed put options;
• Passive placement in lending protocols for interest.

“Active balance management is the most underrated lever for miners. Those who turn Bitcoin from a passive reserve into an active asset will gain a structural advantage ahead of the next halving,” Wintermute believes.

Artificial Intelligence

An alternative is artificial intelligence. Mining companies have spent years building energy infrastructure in regions with cheap electricity. As a result, they now own a resource that is critically needed by the AI industry and cannot be quickly created from scratch.

The shift to leasing capacity for neural networks has already begun. In March, Core Scientific announced the sale of all its Bitcoin holdings and secured a $500 million loan from Morgan Stanley. Most of the proceeds will be used to retrofit data centers for AI needs.

Other players, including Riot Platforms, MARA Holdings, Terawulf, Cango, and many others, have also taken similar steps.

Wintermute emphasized that pivoting to AI requires radical steps and significant capital. For many, this may be unaffordable. However, experts see this as a “healthy shake-up” that will ultimately make the industry more efficient.

Recall that in March, VanEck’s Digital Assets Head Matthew Sigel stated that shifting toward AI makes mining company stocks more attractive.