Recently, I noticed a rather painful phenomenon: Bitcoin miners are now operating at a loss. The cost is about $88,000 per coin, but the price is only around $73,200, which means on average, miners lose about $15,000 for each block mined. This situation started last October when Bitcoin dropped from $126,000 to $70,000, but recent Middle East tensions have made things worse.

Energy costs are the key issue. Oil prices breaking above $100 directly increased electricity costs, especially for miners operating in energy-sensitive regions of the Middle East. The Strait of Hormuz is essentially blocked, handling roughly 20% of global oil and gas flow. Coupled with last week’s 48-hour ultimatum threat, miners face greater risks. The network itself is under pressure. Difficulty dropped 7.76% last week to 1.3379 trillion, the second-largest negative adjustment this year. Hashrate has fallen back to around 920 EH/s, well below the 1 zettahash record set last year. Block times have lengthened to 12 minutes and 36 seconds, far exceeding the 10-minute target.

The expected revenue per unit of hash power (Hashprice) hovers around $33.30 per PH/s daily, which is basically break-even for most hardware, not far from the $28 low point reached on February 23. When miners cannot cover costs, they are forced to sell coins to sustain operations. This adds supply pressure to the market, which is already dealing with a situation where 43% of supply is at a loss, large holders are rebounding by dispersing positions, and leveraged positions are dominating price movements.

Interestingly, publicly listed mining companies have begun adjusting their strategies. Marathon Digital, Cipher Mining, and others are now focusing on AI and high-performance computing, as these businesses can provide more stable returns than mining Bitcoin at a loss. They are expanding data center capacity. The next difficulty adjustment is expected in early April. According to CoinWarz data, difficulty may decrease further. If Bitcoin stays below $88,000 (with no signs of a short-term rebound), miners will continue to exit, and difficulty will keep declining.

The network’s self-correcting mechanism will lower mining costs, but the period from when costs exceed revenues to when difficulty drops enough to restore profitability will cause damage to miners and the spot market absorbing their forced sell-offs. This is not just a story about the mining industry; it’s a story about the entire market structure.