MARA Holdings (MARA) CEO Fred Thiel stated that the Bitcoin mining industry is entering a difficult period characterized by increased competition, rising energy demands, and shrinking profits. Thiel warned that after the next Bitcoin halving in 2028, miners’ situations could become even more challenging, with block rewards halving again to just above 1.5 BTC.
Countdown to Bitcoin Halving: The 2028 Life-and-Death Deadline Approaching
(Source: CoinGecko)
Thiel warned that after the next Bitcoin halving in 2028, miners’ situations could worsen, with block rewards halving again—this time to just above 1.5 BTC. Unless transaction fees increase or Bitcoin prices surge, the economics of mining will become unsustainable for many. “Bitcoin’s design philosophy is that transaction fees will eventually replace subsidies,” Thiel said. “But that hasn’t happened. If Bitcoin’s annual growth rate doesn’t exceed 50%, then after 2028, the math will become very difficult, and it will be even more difficult by 2032.”
This warning about the Bitcoin halving is based on harsh economic realities. Currently, the block reward is 3.125 BTC (after the April 2024 halving), which, at a price of $103,000, is worth about $320,000 per block. After the 2028 halving, it will drop to approximately 1.56 BTC, worth only $160,000 per block. If Bitcoin prices do not rise, miner revenue will be cut in half directly. Even if Bitcoin prices stay at current levels, many high-cost miners will be unable to cover electricity and equipment depreciation.
Despite several brief peaks, transaction fees on the Bitcoin network remain relatively low. Recent fee spikes, such as those caused by Ordinals and inscriptions, have not lasted long enough to replace block subsidies. Thiel noted that miners are paying attention to new trends, such as banks pre-purchasing block space to guarantee settlement priority, which could change dynamics, but no concrete trends have emerged yet.
Three Major Challenges of the 2028 Bitcoin Halving
Block Reward Halving: From 3.125 BTC to 1.56 BTC, with no price increase, revenue is halved
Transaction Fees Not Taking Off: Fees still account for a low proportion of miner income, unable to compensate for reduced block rewards
Hashrate Continues to Grow: Global hashrate keeps increasing, reducing per-unit hash rate revenue
In this environment, smaller miners face enormous pressure. Larger players are adapting by controlling energy and investing in private infrastructure powered by artificial intelligence, while lean operators may be forced to shut down. “Our strategy is to be in the lowest quartile of production costs,” Thiel said. “Because in a tight market, 75% of others will have to shut down before us.” This 75% figure reveals the brutal reality after the halving: only the most cost-efficient 25% of miners will survive.
Energy Costs as the Decisive Factor
“The bottom line is your energy cost,” Thiel emphasized, highlighting the core of mining competition in Bitcoin news. As more people increase capacity and global hashrate continues to grow, profit margins for others shrink. In a zero-sum game, one miner’s gain is another’s loss. When the network’s total hashrate doubles, each miner’s probability of earning a block reward halves.
Many mining companies are increasingly turning to adjacent fields, such as artificial intelligence or high-performance computing (HPC) infrastructure. This diversification allows miners to rent out their computing power for high-value applications like AI training or scientific calculations when Bitcoin prices are low. However, this shift also carries risks, as demand for AI computation can fluctuate, and the technical requirements differ significantly from Bitcoin mining.
Others are simply beaten by participants deploying hardware at lower costs, including major manufacturers and companies like Tether. “You have hardware suppliers running their own mining operations because they don’t sell many devices,” Thiel said. This vertical integration trend makes it even harder for independent miners, as they must compete with upstream suppliers who have cost and supply chain advantages.
Tether’s entry into mining is particularly noteworthy. As the world’s largest stablecoin issuer, Tether has hundreds of billions of dollars in profits that it can invest in mining infrastructure. It can purchase the latest mining machines, rent or buy the cheapest electricity, or even invest in power plants. This capital advantage makes it nearly impossible for traditional miners to compete. As manufacturers and financial giants begin mining themselves, the space for independent miners is severely squeezed.
“By 2028, you’ll either become a power producer, be owned by one, or partner with one,” Thiel said. “The days of being a miner plugged into the grid are numbered.” This prediction offers a clear outlook for the post-halving mining landscape: vertical integration is the only way to survive.
Mergers and Industry Consolidation Accelerate
According to CoinDesk, JPMorgan analysts state that publicly traded Bitcoin miners in the U.S.—which use up to 5 gigawatts of power and may utilize an additional 2.5 gigawatts—are becoming prime acquisition targets for large-scale enterprises and AI companies seeking energy-efficient infrastructure. The recent halving reduced block rewards and increased price volatility, pushing smaller mining firms into unstable financial situations and making them more open to acquisition offers.
This pattern is already evident: partnerships like CoreWeave with Core Scientific for 200 MW of AI capacity, and Riot Platforms’ (RIOT) aggressive attempt to acquire Bitfarms, reflect a broader industry shift toward high-performance computing (HPC) and strategic integration. Brokerage firm Bernstein has identified Riot Platforms as a leading consolidator, citing its financial resources for acquisitions. Riot’s active pursuit of Bitfarms in October 2024 indicates an increasingly fierce competition strategy to secure scale and energy agreements.
JPMorgan suggests this wave of consolidation could “streamline the Bitcoin network” by shifting energy resources away from smaller participants, potentially increasing profits for those remaining. While advantageous for large miners, this also implies a decrease in industry decentralization. When a few giants control most of the hash rate, the network’s resistance to censorship and security could be questioned.
Greenidge Pod X: Innovation and Efficiency Race
Innovation is also transforming the industry. Greenidge Generation Holdings Inc. recently launched Greenidge Pod X, a modular mining solution designed to improve efficiency and operational uptime. Pod X can house 792 miners per unit—35% more than comparable products—and has been installed in four U.S. states, enabling rapid deployment at new sites. CEO Jordan Kovler emphasized that Pod X positions Greenidge as a leader in a market where operational scale and capital efficiency are increasingly critical.
This modular innovation demonstrates that even amid consolidation, technological advancement can give miners a competitive edge. The quick deployment capability allows Greenidge to flexibly chase the cheapest electricity sources, moving equipment swiftly to lower-cost regions when electricity prices rise elsewhere. Such flexibility is highly valuable in an environment with fluctuating energy prices.
However, challenges remain. While JPMorgan expects M&A activity to accelerate, analysts warn that regulatory hurdles and energy market volatility could complicate deals. Additionally, success in integrating HPC depends on miners’ ability to generate revenue from computations outside Bitcoin, which involves risks. Demand for AI computing may not be as stable as expected, and the technical requirements differ significantly from Bitcoin mining.
Currently, the industry’s future hinges on two key factors: ensuring affordable, scalable energy and adapting to rapidly changing technological and financial conditions. As Marathon’s CEO noted, “The next cycle will distinguish resilient players from outdated ones.” Looking ahead, Thiel predicts that as miners reach profitability limits, the market will self-correct. But barriers are rising quickly.
