Currently, Bitcoin appears to be experiencing one of its most challenging periods to date.

This situation escalated with the January 31, 2026, release of batch number two of the Epstein files, which implicated numerous individuals and companies within the Bitcoin community. One may wonder if discussions surrounding Epstein will persist into 2036.

The release has ominously coincided with Bitcoin’s fourth-largest drawdown, where the cryptocurrency plummeted by 21%, equating to a loss of $16,000 in value, as it fell from $76,000 to $60,000 in a single day.

This decline has been particularly severe for Bitcoin miners, already grappling with historically low revenue. According to the Bitcoin mining data platform Hashrate Index, the Bitcoin hashprice—a measurement of mining revenue in either USD or BTC per unit of hashrate—reached an all-time low of $28.90 per petahash per day. This indicates that operating 1 petahash of hashrate (approximately equivalent to five new generation ASIC miners) yields a mere $28.90.

In fact, an individual could achieve a better daily income through panhandling.

Under these circumstances, it is unsurprising that Bitcoin’s difficulty has experienced six negative adjustments in a three-month period between November 12, 2025, and February 7, 2026. The solitary positive adjustment during this timeframe was a minimal 0.04% on Christmas Eve. The last instance of a similar pattern occurred in 2011, a time when early enthusiasts were mining using computers with processing power equivalent to that of a toaster compared to today’s ASIC miners.

However, Bitcoin’s declining price is not the sole factor impacting mining difficulty. A shift towards AI adoption is evident, with many miners decommissioning their ASIC fleets in favor of more promising technological avenues.

The economic challenges currently faced by miners provide insight into the future of an industry whose fundamental commodity seems to be trending towards backwardation over a considerable duration. In other words, the hashprice appears to be on a trajectory towards zero, raising critical questions about Bitcoin’s future viability.

Such implications could be construed negatively, but they may also harbor potential for positive adaptations.

For Sale, Blockspace: Used Once

Before making predictions, it is essential to evaluate the current state of the Bitcoin mining industry.

The observation that hashprice is trending towards zero can be attributed to a confluence of factors, including Moore’s Law. As semiconductor technology evolves, the energy efficiency of ASIC miners improves, allowing miners to produce greater hashrate with reduced energy consumption. This, in turn, affects Bitcoin’s difficulty and decreases mining rewards per unit of hashrate.

Looking ahead, the block subsidy is destined to reach zero, with projections indicating it will stand at 0.78125 BTC by 2036. For the block subsidy to equate to the current payout under today’s 3.125 BTC subsidy—assuming a current BTC price of about $212,000—Bitcoin would need to appreciate to $272,000.

In the absence of such price increases, Bitcoin miners must rely heavily on substantial transaction fees. However, even this realm presents negative trends, as current transaction confirmations are available for under one satoshi per virtual byte (sat/vbyte).

Bitcoin adoption is at unprecedented levels, yet the mempool shows signs of stagnation. This phenomenon can be attributed to data-efficient upgrades such as SegWit and Taproot and the ongoing scaling of Bitcoin, which Hal Finney once envisioned: through the emergence of Bitcoin banks, whether they be exchanges, custodians, or financial products like ETFs.

In recent years, the most notable on-chain activity has been driven by items often labeled as “shitcoins”: ordinals and inscriptions, which have found their main audience among users of Ethereum and Solana.

Regardless of personal stances on these developments, it is crucial to acknowledge that they provided a significant boost for miners and increased block rewards before and after the 2024 Halving.

Currently, this market has diminished, and thus far, no Layer 2 solutions or alternative applications for the blockspace have emerged to fill this gap. Given the lack of traction for various Layer 2 projects showcased during the ordinals hype, it may be prudent not to rely on these platforms generating meaningful fees over the next decade. While there remains hope for new use cases—perhaps in the realm of AI leveraging Bitcoin timestamps for content and identity attestations—there is little certainty in such outcomes.

Nonetheless, it is plausible that AI could yield some positive externalities for Bitcoin miners, even as it introduces certain challenges.

The Coming Domin(AI)tion Blackpill

The most significant development in Bitcoin mining over the past year appears to be largely unrelated to Bitcoin itself.

Major players in the Bitcoin mining sector—such as Core Scientific, Riot, IREN, Cipher, CleanSpark, and Hut 8—are transitioning from ASICs to GPUs in pursuit of opportunities in AI and high-performance computing.

This shift may be viewed as somewhat retrogressive; however, GPUs are not producing nonces for mining as they once did but are now utilized to run AI tasks.

It remains uncertain how many within the Bitcoin community have fully contemplated the broader implications of this trend. Publicly traded miners, which constitute approximately 40% of Bitcoin’s hashrate, are seeking to transform each basis point of this total into computing resources for AI applications.

The economic rationale behind this shift is straightforward: miners can monetize their electricity generation at significantly higher rates compared to the returns from Bitcoin mining. Such a realization may challenge the perception of miners as primarily altruistic actors committed to defending the network against malicious entities.

This development is arguably beneficial. Primarily, it creates a headwind for hashrate growth, which in turn could enhance mining profitability. A reduction in the number of large-scale miners would result in a more favorable distribution of satoshis for other participants in the ecosystem. Additionally, this migration may eliminate certain miners who possess disproportionate operational and financial advantages.

The specific concern in question relates to the access to capital markets that public miners enjoy, enabling them to aggressively expand their hashrate even when operating at a loss. When profitability becomes an issue, these firms can resort to diluting shareholders to sustain operations. For years, public miners have issued new equity, sold it in the open market, and utilized the proceeds for operational support and accelerated expansion.

The net result of such practices has been an accelerated growth in Bitcoin’s hashrate, exceeding earlier expectations. The transition of hashrate to the United States, following China’s mining ban in 2021, has seen a rapid increase in the number of public miners, mirroring the past meteoric growth driven by Bitmain’s practices.

However, the allure of AI-based revenue streams may prove too compelling for these companies to overlook, resulting in a significant withdrawal from Bitcoin mining operations. This shift could mirror the dramatic changes seen during The Great Hashrate Migration post-2021.

The Megaminer Disintermediation Whitepill

Nevertheless, this impending shift should not be viewed as a blackpill but rather as a whitepill.

As large-scale miners recede from prominence, smaller and medium-sized miners—those operating on the fringe and with fewer opportunities to diversify into alternative data center applications—are likely to endure, if not flourish.

Within a decade, it is anticipated that the majority of hashrate will originate from these miners rather than from publicly traded companies, which often engage in mining activities without regard for true profitability. Miners who survive through to 2036 will likely exhibit remarkable adaptability and resourcefulness, employing strategies that enhance operational efficiency. This may encompass recycling waste heat, mining in off-grid settings such as oil and gas wells, wind farms, or solar installations, or integrating operations with power-producing facilities.

For any large-scale miners remaining in the industry at that time, their survival may primarily hinge on the utilization of energy-generating assets, such as nuclear power plants or natural gas facilities, to capitalize on surplus electricity during peak production periods.

This observation assumes that block rewards will remain sufficiently robust to support hashrate, particularly at the operational margins. As discussed previously, Bitcoin prices would need to reach a threshold of at least $272,000 to sustain the value of the current block subsidy.

It is preferable for transaction fees to constitute more than approximately 1% of the block subsidy, a metric that has predominantly prevailed over the past year, though future guarantees remain elusive. Even in a scenario where revenue contribution from transaction fees diminishes, miners with access to the most economical energy sources will persist, assuming Bitcoin does not lose all of its value.

Moreover, advances in ASIC energy efficiency will alleviate some profitability challenges, although the rate of improvement in watt-per-terahash ratios is gradually slowing and will likely approach a plateau as current trends persist.

The Last Five Years Have Been the Exception, Not the Rule

Ultimately, these developments hold positive implications. They could result in the disintermediation of the largest entities within the Bitcoin mining space, which have the potential to become critical chokepoints that could jeopardize the network’s integrity.

Public miners represent a clear point of centralization, as they consist of highly scrutinized entities that prioritize legal compliance and may yield to governmental pressure should their business interests be threatened. For instance, in 2021, Marathon Digital Holdings (formerly known as MARA) began mining OFAC-compliant blocks, censoring any transactions linked to sanctioned wallets, despite the absence of any legal precedent mandating such actions.

Furthermore, the threat posed by mining pools to Bitcoin’s core principles of permissionless and censorship-resistant operations cannot be overlooked. The predominant method of operation among these pools is full-pay-per-share (FPPS), which guarantees miners remuneration regardless of the pool’s actual block discoveries. Such mechanisms effectively serve as a safety net for miners, ensuring income even when the pool’s success in mining is variable. For example, should an FPPS pool mine ten blocks in a day yet be responsible for payouts equivalent to only nine blocks, the pool retains the difference. However, if the pool succeeds in only eight, it bears the loss.

As hashprice continues to compress with each subsequent block subsidy halving, the FPPS model will become increasingly untenable. This phenomenon will be exacerbated if transaction fees start contributing a more significant portion to mining revenue, complicating the FPPS payout model, which relies on a set ratio of expected transaction fees over time. In such instances, concerns regarding pool solvency may become prevalent, prompting FPPS providers to adapt or risk obsolescence.

This scenario presents an additional advantage by alleviating a potential vulnerability within the Bitcoin network. Presently, Foundry, a U.S.-based mining pool, accounts for one-third of Bitcoin blocks. One might contemplate the consequences if governmental authorities instructed Foundry to censor transactions and establish blacklists for specific wallets.

If the FPPS model fades, a shift towards self-mining and PPLNS-style payouts may dominate the landscape, thereby undermining the influence of dominant FPPS pools and mitigating associated risks. Nevertheless, it is essential to consider the possibility that as Bitcoin mining becomes more variable, a few pools may consolidate their market shares, as only the most substantial firms would have the capabilities to attract participants and adhere to payout obligations.

In conclusion, Bitcoin mining is inherently a challenging business model, which may ultimately prove beneficial. The diminishing block subsidy and declining hashprice will necessitate a focus on the most efficient energy utilization, compelling miners to operate with greater caution and prudence. Over the next decade, Bitcoin mining is likely to become even more decentralized as a direct result of these shifts.

It stands to reason that in hindsight, the dominant trend of large-scale mining in the U.S. following China’s mining ban may be viewed as a temporary anomaly, a consequence of monetary policies shaped by fiat currency that were destined to unravel as economic realities realigned.

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