Dimming Margins, Diversification and the Security Question: The State of Bitcoin Mining Post‑Halving

For years, Bitcoin mining was a high‑stakes race where specialized machines churned out coins and secured the network. But in the wake of the latest halving, soaring costs and shrinking subsidies have forced miners into a new reality: either adapt or risk being squeezed out. The implications ripple far beyond balance sheets—into the very security of the Bitcoin network.

The profitability squeeze: current vs past

To understand the state of mining profitability today, one must look at both the evolving economics (hardware, electricity, network difficulty) and the top‑line reward environment for miners.

Past profitability
Prior to the April 2024 halving (when the block subsidy dropped from 6.25 BTC to 3.125 BTC) miners enjoyed relatively healthy margins assuming stable electricity costs, efficient rigs and modest competition. In 2016‑20, the block subsidy and Bitcoin price rises offered strong headwinds in miners’ favour. A historical chart shows that mining profitability (measured as USD per TH/s) has steadily declined over time. Even after the 2020 halving, miners benefited from higher Bitcoin prices which somewhat offset the cut in subsidy.

Current conditions
Today, mining profitability is under intense pressure. Real‑time calculators show modest profits: for example, one calculator using 390 TH/s at 7.215 kW electricity consumption at $0.05 per kWh estimated daily profit around $9.92 at a BTC price of around $111,000. Other trackers show values of only a few cents per TH/s per day. Several ASIC profitability monitoring services list very low returns even for the latest machines.
A major factor: the subsidy halved in 2024, dropping to 3.125 BTC per block at block 840,000.
Further, network difficulty and total hash rate continue to climb, meaning each miner’s share of the issuance is squeezed.
On the revenue side, transaction fees remain a relatively small portion of miner revenue—often only a single‑digit percent of total miner revenue.
All of this means: unless miners have very low electricity costs, efficient machines and good utilisation, profitability is constrained.

Bottom‑line comparison
In the past, miners could rely on a higher subsidy relative to network hash rate, and across a cycle they could amortise hardware and generate robust returns. Today, with the subsidy cut in half and rising operational costs (electricity, cooling, infrastructure), the margin cushion is much thinner. In short: profitability is significantly worse today for a given machine and electricity cost set than in the pre‑halving era.

Who’s struggling (and pivoting)

The challenging economics have forced many miners to adapt or fail.

Bankruptcies and distress
Several mining firms have filed for bankruptcy or serious restructuring. For example, Compute North filed for bankruptcy in September 2022 following over‑extension and a deteriorating mining business. Core Scientific also filed for Chapter 11 in late 2022. More recently, the U.S. miner Rhodium Encore LLC has been in bankruptcy proceedings. These cases underline how tight margins and high fixed costs (power contracts, lease obligations, hardware financing) have become existential threats.

Pivots into AI and infrastructure
On the flip side, some miners are shifting gears rather than digging deeper into mining per se. CleanSpark announced a strategic expansion into AI‑data‑centres to diversify revenue beyond Bitcoin mining. Another company, Iren (formerly Iris Energy), reported a major increase in AI‑cloud capacity and GPU deployments while continuing mining operations. A broader industry narrative from mid‑2025 also highlights miners converting facilities to AI infrastructure as mining profitability wanes.
This shift makes sense: the same low‑cost power and data‑centre infrastructure used for mining can sometimes be repurposed for high‑performance compute (HPC) needed in AI/ML workloads, offering potentially steadier cash flows.

Why this matters to Bitcoin’s security

Mining is not just about profit. In the Bitcoin system, miners secure the network by expending real economic resources (electricity, hardware) to perform Proof‑of‑Work (PoW). If miners’ economic incentives weaken, then certain security risks emerge.

Subsidy dominance and fee weakness
Currently, miners derive the bulk of their revenue from the block subsidy (newly minted bitcoins) rather than transaction fees. According to analysis, fees remain a small share of mining revenue.
This means the network remains reliant on the issuance subsidy to sustain security. As more halvings occur (every ~4 years) the subsidy will continue to drop, placing greater reliance on fees—and if fees don’t rise sufficiently, miners’ incentives may diminish.

Cost‑intensive PoW
PoW is inherently cost‑intensive: electricity, equipment depreciation, cooling and operational overheads. When revenue is squeezed (as we see today) miners will be more selective in operations, may shut down less efficient rigs, or leave the network if unprofitable. This could reduce hash‑rate, increase block times, increase centralisation risks, or make the network more vulnerable to attack (e.g., 51% or selfish mining scenarios). Some academic work suggests that when miner reward is low relative to cost, opportunistic behaviours increase.
In short: there is a direct line from miner profitability → miner participation → network hash‑rate → Bitcoin security.

Transaction volume and fee risk
Because fees are currently small, if the subsidy drops significantly (future halving) and fees don’t fill the gap, miners may face unprofitable conditions. If enough miners drop out or consolidate, the decentralised security premise of Bitcoin may erode. The fact that fees haven’t yet scaled to replace subsidies is a structural risk.

The role of the 2024 halving

The most recent halving in April 2024 dramatically increased the pressure. The block subsidy was cut in half—from 6.25 BTC to 3.125 BTC per block. While Bitcoin price and fee revenue could in theory compensate, in practice many miners found the margin squeeze severe.

When the subsidy is halved, unless difficulty or competition falls correspondingly, or the price of Bitcoin rises, each miner’s revenue share drops. Many miners may have assumed that the price would jump, but as often, timing and magnitudes matter. Many are now scrambling for efficiency or alternative revenue.

In short: the 2024 halving is a key root cause of the current stress in mining economics.

Future outlook: what to expect

Given the current trajectory, here are some reasoned projections and caveats for what may come next.

Consolidation and exit of inefficient players
We should expect further shutdowns or restructuring among miners with high electricity costs, older rigs, or heavy debt loads. The winners will be those with ultra‑low power tariffs, efficient machines, and flexible cost structures (including diversification into AI or other compute workloads).

More shifts into compute/AI infrastructure
The pivot into AI/data‑centre business seems likely to accelerate. Miners already have power contracts, infrastructure and some operational scale; switching or adding AI workloads gives them another revenue stream beyond mining. That may become a survival strategy for the sector.

Fee dynamics and security implications
For Bitcoin’s security model to remain strong long‑term, transaction fee revenue must grow (or remain at least stable) relative to mining cost. If fees stay low and the block subsidy keeps halving, miners’ incentives will compress further. Monitoring the ratio of fee revenue to subsidy (currently small) is important.
Should miner participation decline, hash‑rate drops, difficulty adjustment lag or centralisation increase, then security margins thin.

Mining cost of production will be key
The breakeven cost of producing one Bitcoin (or share thereof) will increasingly determine which operations survive. As hardware innovation slows (ASIC gains are incremental) and electricity is a major cost, geographic/regulatory arbitrage will matter. Some regions with cheap renewables or stranded power may be the winners.

Bitcoin price remains wild‑card
A rising Bitcoin price can mask or offset reduced subsidy, so macro price trends remain relevant. But relying solely on price increases is risky for miners — structural cost issues remain.

Longer‑term view: halving drift
Looking further out, as subsidies continue to shrink (every ~4 years until issuance ends), the mining industry will gradually shift from “coin creation” to “transaction‑processing revenue”. If that transition fails, the network may face incentive misalignment. Academic work warns that if miner reward is too low, network security or decentralisation may suffer.
In effect: mining economics today are a preview of the long‑term challenge that Bitcoin must navigate.

Conclusion
The economics of Bitcoin mining have entered a tougher, more challenging phase. The halving in 2024 cut the subsidy at the same time as costs remained high and difficulty stayed elevated. Many miners have adopted new strategies—shutting inefficient rigs, exiting, or pivoting into AI/data‑centre infrastructure. This isn’t just a business issue: mining profitability has direct implications for the security of the Bitcoin network, which still relies heavily on subsidy‑driven rewards rather than fees. The key question for miners and for the network alike is whether rising fees, operational efficiencies and price appreciation will fill the gap. If not, the network could face structural risk.