The economic dilemma of miners: when the "survival meme" becomes reality

In the world of cryptocurrencies, narratives unfold at a frenetic pace. While Crypto Twitter enjoys creating “miner memes” about imminent crashes and apocalyptic market prospects, there is a group that thinks very differently: Bitcoin miners. Unlike traders who rely on emotion and sentiment cycles, miners operate according to strict mathematical equations. Their survival depends on mechanical factors: how much they earn from the protocol and how much they spend on energy. Today, with Bitcoin around $90.67K, this equation is becoming increasingly tight.

How the mining economy works

The system is surprisingly simple in its construction. The Bitcoin protocol distributes 3.125 BTC for each mined block, with a block generated on average every 10 minutes. This translates to about 144 blocks daily, or 450 BTC per day globally. In a month, the entire mining network produces approximately 13,500 BTC. At today’s price, this represents a gross value of about $1.2 billion per month.

However, this “pie” must be distributed among a record computational power of 1.078 Exahash per second (EH/s). The result? Each Terahash of computational power generates only 3.6 cents in daily revenue. It is on this microscopic economic basis that the security of a $1.7 trillion network rests—a reality far from the glamour of the “miner memes” circulating on social media.

Costs: the real test of profitability

Miner profitability is not measured solely by gross revenue. Operating costs are concrete and variable. Electricity is the most critical item and varies drastically based on geography and hardware efficiency. A modern miner using high-end devices like the S21, with consumption of 17 joules per Terahash and access to cheap energy (0.05-0.06 dollars per kWh), can still operate profitably. But those with outdated equipment or paying high energy rates find themselves in a precarious position.

According to CoinShares estimates from December 2024, the cash cost to produce a single BTC among publicly listed miners was about $55,950. Cambridge University currently estimates the cost around $58,500. For the two largest publicly traded operators:

• Marathon Digital reports energy costs of $39,235 per BTC
• Riot Platforms stands at $46,324 per BTC

At these cost levels, cash profit margins remain robust even with Bitcoin at $90K. But the picture becomes significantly more complicated when non-monetary costs are considered.

The hidden total cost

Depreciation, impairments, stock incentives, and other accounting liabilities turn mining into a capital-intensive activity. Once these elements are incorporated, the total cost to mine a single BTC can easily exceed $100,000. CoinShares estimates the total mining cost at around $106,000. Marathon Digital, despite having contained energy costs, finds itself paying over $110,000 per BTC once all factors are accounted for.

This data reveals the true dilemma: at the current price of $90,670, many miners are already operating at an accounting loss, even if they maintain positive cash flow. It is this discrepancy that explains why more and more miners choose to accumulate the mined BTC rather than sell immediately, transforming mining from a purely extraction activity into an accumulation strategy.

Two equilibrium scenarios

Cost analysis reveals the existence of two different mining realities:

Scenario 1 - Efficient industrial miners: Operators with modern hardware, access to low-cost energy, and lean balance sheets can maintain positive cash flow as long as Bitcoin remains above $50,000. With the asset currently at 90K, they earn over $40,000 in cash profit per BTC mined, even though they may operate at an accounting loss.

Scenario 2 - Marginal operators: Those including all non-monetary costs are already below the economic breakeven point. They can continue mining thanks to positive cash flow but accumulate increasing accounting losses each month. This pressure incentivizes them to hold onto BTC rather than sell, hoping for a price rebound.

Where is the mining sector headed?

As long as cash flow remains positive, mining will continue. Currently, with Bitcoin at 90K and network difficulty stable, the system shows signs of resilience. Stronger miners like Marathon leverage their economies of scale and access to capital markets to thrive.

But the real risk emerges if access to capital tightens for miners or if prices fall further. In that case, margins would compress dramatically. Weaker miners would be forced to liquidate their accumulated BTC, adding selling pressure. The positive feedback loop would come to a halt.

For now, the “miner meme” of survival remains more of a joke than an imminent reality. But it is a joke built on increasingly fragile foundations, where positive cash flow masks growing accounting losses.