Community Trust ScoreVerified
The Bitcoin mining sector is heading into one of its toughest periods yet, according to Fred Thiel, CEO of MARA Holdings (Marathon Digital). With energy costs rising, hashrate competition intensifying, and profit margins narrowing, Thiel believes only miners that secure control over their own power supply or diversify into artificial intelligence (AI) and high-performance computing (HPC) will endure.
“Bitcoin mining is a zero-sum game,” Thiel said in an interview with CoinDesk. “As more people add capacity, it gets harder for everybody else. Margins compress, and the floor is your energy cost.”
His comments reflect growing concern across the industry as miners grapple with tightening economics and prepare for the next Bitcoin halving in 2028, when block rewards will be cut in half once again—from 3.125 BTC to roughly 1.56 BTC per block.
Rising Energy Costs Threaten Smaller Players
Energy costs have long been the lifeblood of Bitcoin mining profitability, and Thiel emphasized that control over energy infrastructure will soon separate the winners from the losers. As global hashrate climbs to new highs, competition is eroding profits across the board.
“You have hardware vendors running their own mining operations because customers aren’t buying as much equipment,” Thiel explained. “The global hashrate keeps growing, which means everyone else’s margins keep shrinking.”
This shift has forced smaller miners—those reliant on third-party power contracts—to either seek partnerships with energy providers or exit the market entirely. Meanwhile, large-scale miners with direct access to renewable energy or self-owned power generation facilities are consolidating their dominance.
AI and HPC: The New Lifeline for Miners
To stay profitable, many Bitcoin miners are branching out into adjacent technologies such as artificial intelligence and high-performance computing (HPC). These ventures allow firms to repurpose existing data centers, cooling systems, and infrastructure for more diversified revenue streams.
“AI and HPC require the same kind of infrastructure—lots of power, cooling, and hardware optimization,” Thiel noted. “So it’s a natural pivot for mining companies that already operate massive data facilities.”
This transition is gaining traction among public mining firms. Some are converting underperforming sites into AI-focused computing centers, while others are renting out excess power capacity to AI companies. By expanding beyond Bitcoin mining, these firms hope to offset revenue declines expected after the next halving event.
The 2028 Halving: A Survival Test
Thiel warned that the upcoming 2028 halving could be a breaking point for many operations. With block rewards set to drop by 50%, miners will have to rely increasingly on transaction fees or a significant rise in Bitcoin’s price to maintain profitability.
“Bitcoin was designed with the idea that transaction fees would eventually replace the subsidy,” he said. “But that hasn’t happened. If Bitcoin doesn’t grow at 50% or more annually, the math gets very tough after 2028—and even tougher in 2032.”
Although network activity occasionally spikes—such as during the rise of Ordinals and inscriptions—these events have not generated a sustainable increase in transaction fees. Without stronger network demand, miners may struggle to cover operational costs once block rewards are reduced further.
The Economics of Hashrate Competition
The continuous growth of Bitcoin’s global hashrate adds further pressure. As more miners come online with advanced hardware, the difficulty adjustment mechanism raises the threshold for profitability.
Thiel said many manufacturers, including firms that traditionally sold mining equipment, are now deploying their own rigs to capture a greater share of network rewards. This vertical integration trend is squeezing independent operators and reshaping the competitive landscape.
“Our strategy is to be in the lowest quartile in terms of production cost,” Thiel stated. “Because in a tight market, 75% of the other guys have to shut down before we do.”
His remarks underline Marathon’s focus on efficiency, energy optimization, and scalability—key survival factors in an increasingly consolidated industry.
Outlook: Energy Control and Diversification Are Key
Looking ahead, analysts expect further consolidation as miners with weak balance sheets and high operational costs are forced out. The survivors will likely be those who control their energy supply, leverage new technologies, and adopt diversified business models.
By integrating renewable energy sources and investing in advanced data infrastructure, major mining firms aim to weather the post-halving environment and adapt to new digital trends such as AI computing.
For the broader Bitcoin ecosystem, these developments signal a gradual shift toward industrial-scale operations and away from small, independent miners. As Thiel put it, the race is no longer just about who can mine more Bitcoin—it’s about who can power their future sustainably.
