The future of block reward mining is under serious threat as the BTC token’s price sank to 15-month lows with little sign that help is on the way.
The recent crypto price crash wiped nearly half a trillion dollars off the overall market cap in less than a week, and that was before Wednesday’s plunge. BTC slipped below $71,000 by the evening of February 4, erasing all the gains it’s enjoyed since Donald Trump was elected president for the second time in November 2024.
At $71,000, BTC is down ~44% from its all-time high of $126,080 last October, and there doesn’t seem to be anything on the horizon that might restore the token to its former glories. Meanwhile, BTC’s ‘digital gold’ mantra is in tatters as actual gold soared to record highs thanks to investors seeking security in assets with a proven history of preserving value.
This deep and sustained slump has dire implications for BTC miners. As of Wednesday evening, the all-in cost of mining a single BTC token—including the cost of replacing outdated ASIC mining rigs—sat just below $95,000, roughly $24,000 above the token’s current price.
Clearly, this is unsustainable. Coupled with the ever-rising cost of energy as miners compete with data centers devoted to AI and other high-performance computing (HPC) operations—some of these run by miners who made the ‘pivot’ to AI/HPC and its more reliable revenue streams—the list of older ASICs that are no longer profitable to operate grows by the day.
Miners that have been putting off upgrading their ASIC fleet in the hope that BTC’s price would rebound are now weighing whether to (a) make an even larger financial bet on BTC’s future, (b) ditch mining entirely and join the AI/HPC crowd, or (c) just quit this racket already. Some will almost certainly choose to switch off their mining rigs, leading to further concentration of the network’s transaction consensus mechanism, with potentially dire implications for the network’s long-term security.
The BTC network’s mining difficulty rate is set for its next adjustment on February 8, and the downward trend of the past five cycles is expected to continue. Current estimates are for a significant percentage drop, something in the mid- to high-teens. But absent a significant surge in BTC’s fiat value, that difficulty decline won’t be enough to return most struggling miners to profitability.
The share prices of publicly traded miners took a pounding on Wednesday. The Trump-linked American Bitcoin Corp (NASDAQ: ABTC) slipped 5.2%, bringing its decline over the past five days to -18%. Riot Platforms (NASDAQ: RIOT) fell 7.8% on the day, -19.4% in the past five days.
MARA (NASDAQ: MARA) fell 8.5% on Wednesday, -20% in the past five days (and -53% over the past 12 months). CleanSpark (NASDAQ: CLSK) slid 10% on Wednesday, -24% for the past five days. And despite its efforts to boost its AI focus, Iren (NASDAQ: IREN) took the biggest Wednesday hit, tumbling 17.4% and pushing its five-day decline to -28.6%.
Earlier this week, investor Michael Burry (of The Big Short fame) suggested on Substack that many miners could face bankruptcy if BTC’s slide isn’t arrested soon. But Burry isn’t optimistic, saying there’s “no organic use case reason for Bitcoin to slow or stop its descent.” Burry warned that miners who hold significant BTC ‘treasuries’ (like MARA) could be forced to unload their tokens to pay their bills, a move that would only accelerate BTC’s downward trajectory. Fun times.
Weather woes ain’t helping
BTC’s hashrate (total computing power dedicated to maintaining network security) currently sits at around 900 EH/s, after briefly sinking below 700 EH/s last month. That’s well off its recent highs of 1,000 EH/s, but the hash price index (what miners earn based on their hashing power) is nearing all-time lows.
The hashrate’s abrupt dip and partial rebound were due to miners switching off their rigs in response to last month’s winter storm, which pushed electricity grids across the U.S. to their breaking points. Among the more disrupted regions was Texas, where many of the largest publicly traded miners have based a good chunk of their operations.
CryptoQuant analysts reported that publicly-traded miners’ production fell from 77 tokens per day to just 28 during the shutdown. Non-public miners saw their daily output fall from 403 BTC to just 209. Similar declines haven’t been reported since shortly after the last BTC ‘halving’ event in the spring of 2024, which cut the block reward from 6.25 tokens to 3.125.
Riot Platforms is one of the miners that regularly reports its so-called ‘power curtailment credits’ revenue, aka money paid by local/state utilities to Riot to power down its operations during times of peak electricity demand. In the third quarter of 2025, this ‘money for nothing’ added $30.6 million to Riot’s revenue (about 1/6 of its quarterly total).
While many miners suffered serious declines in their mining revenue during the deep freeze, those with sweetheart utility deals enjoyed larger profits than they’ve had from mining in a long time. If we were miners, we’d be investigating Bond villain methods of manipulating the weather to ensure regular recurrences of the polar vortex dipping further south than usual.
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Cango no longer HODLing, Cipher finds gold in junk (bonds)
Many miners have fixed costs that render any prolonged shutdown unprofitable, regardless of corporate welfare from local utilities. This is forcing some to take steps they previously declared to be off-limits.
Cango (NYSE: CANG) announced this week that it sold 550 BTC last month, about 54 more than it mined in January. This marked the first time Cango has unloaded any of its BTC since it began its mining journey in November 2024. But it won’t be the last.
Cango CEO Paul Yu revealed that, “starting this month, we will selectively sell a portion of newly mined Bitcoin to support the expansion of our inference platform and other near-term growth initiatives. This tactical flexibility will allow us to seize new business opportunities and manage our liquidity with greater agility.”
Even with last month’s sales, Cango currently ranks 15th on the list of BTC treasury firms, fifth-highest among mining operators. The mining treasury list is led by MARA, which holds 53,250 tokens, much of which was purchased with borrowed cash (at significantly higher prices than BTC currently boasts). Riot ranks second with 18,005 tokens, but that’s down from 19,324 just one month ago.
Many miners have been loading up on debt to fund their AI/HPC pivots, but this process could get more difficult and more expensive if lenders see little future in their formerly mainstay mining operations.
On Feb. 3, Cipher Mining (NASDAQ: CIFR) announced plans to raise $2 billion for its AI-focused Black Pearl Compute subsidiary via the junk bond market. The money will primarily be used to complete Black Pearl’s Texas data center, but also to service existing debt (Cipher raised another $1.73 billion just last November).
But in a sign that the AI frenzy isn’t losing steam, Cipher’s latest debt offering attracted a whopping $13 billion worth of orders from junk bond investors. The Black Pearl site’s 15-year deal with Amazon Web Services (NASDAQ: AMZN) likely didn’t hurt. Pivot or die, people.
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BitRiver founder Igor Runets arrested for Russian tax evasion
Russian miners have a lot more to fear than inclement weather after the founder of the country’s largest operator was arrested on charges of tax evasion. On February 2, Kommersant reported that Igor Runets, who founded BitRiver in 2017, was placed under house arrest following a Siberian court ruling that targeted Fox Group, BitRiver’s parent company, for allegedly failing to pay its debts.
The brouhaha stems from a RUB700 million (US$9.2 million) claim by Infrastructure of Siberia, a subsidiary of the En+ Group energy firm under the control of oligarch Oleg Deripaska.
In 2024, the Siberian utility reportedly paid Fox Group in advance for gear that was never delivered. En+ pressed its claim in court and received a favorable ruling last April, only to discover Fox lacked sufficient assets to make good on its debt. En+ subsequently filed a bankruptcy petition against Fox.
BitRiver also reportedly stiffed En+ of RUB133 million in payments for electricity used to power its mining operations. Other utilities have pressed similar claims against BitRiver, including a RUB640 million unpaid tab with the Irkutsk Electric Grid Company, RUB169 million owed to NTEK (an energy subsidiary of Norilsk Nickel), along with other claims by former BitRiver suppliers.
BitRiver is/was Russia’s largest miner, operating 15 data centers boasting a combined 533MW of capacity and believed to be responsible for over half the country’s mining output. The company was hit with U.S. economic sanctions in 2022 following Russia’s invasion of Ukraine, and Kommersant sources claimed BitRiver’s financial woes may have been exacerbated following the payment of a RUB400 million VAT bill in early 2024.
Last February, BitRiver was forced to shut some of its mining sites after they were found to be operating in violation of mining bans in remote Russian regions. Its bank accounts were frozen last spring following the En+ court ruling, which also resulted in the seizure of some of BitRiver’s gear.
Vedomosti reported that Russian tax authorities had questioned the validity of payments to BitRiver totaling “several million rubles monthly” from an unspecified company for ‘certain computing services.’ This other company had no apparent economic need for HPC services, leading the authorities to suspect the payments were actually for “electricity and mining infrastructure.”
When the authorities questioned BitRiver about these ‘expense’ payments, they received “extremely neutral and vague” responses, leading the authorities to conclude that the arrangement was a ruse to reduce the other company’s tax obligations. That in turn prompted them to shine a brighter spotlight on BitRiver’s finances.
TASS reported this week that BitRiver’s 2025 revenue hit $131.6 million, but Komersant reported that 80% of BitRiver’s senior staff had left the company by year’s end. Vedomosti reported that BitRiver staff haven’t been paid in three months and that much of the company’s equipment and documentation was removed by unknown individuals and transported to unknown locations.
Early last year, Russia began requiring its miners to register their gear for tax purposes. However, compliance with this edict has been scant, leading Russia’s Ministry of Justice to propose significantly higher penalties (both financial and custodial) for miners who continue to flout the rules.
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Tether open-sources Mining Operating System
A somewhat similar tax dodge was allegedly perpetrated by Northern Data AG, a miner turned AI/HPC data center operator whose offices were raided by German authorities last autumn. Northern Data was suspected of ‘large-scale VAT fraud’ by illegally claiming a Swedish tax break on certain microchips it said were being used for AI, but were instead used for Sweden-based mining operations.
Northern Data claimed to have spun off its Peak Mining unit last November as part of a convoluted deal in which Northern Data’s majority owner Tether—issuer of the USDT stablecoin—sold Peak Mining to a firm controlled by Tether’s co-founder, Giancarlo Devasini, and CEO Paolo Ardoino, although the related-party nature of this transaction wasn’t disclosed at the time.
The scope of Tether’s own mining operations can be equally opaque. At one point, the company claimed to be conducting mining in Uruguay, Brazil, and Argentina, although its Uruguayan operation had its power cut off by the local utility last summer after refusing to pay its $5 million electricity bill.
Undaunted, Tether announced this week that the long-promised open-sourcing of its BTC Mining Operating System (MOS) was finally here. Pimped as “scalable, resilient, and modular, with a peer-to-peer architecture that supports deployments ranging from small installations to large industrial sites,” the MOS aims to bring “hardware, energy, infrastructure and operational data into a single unified system.”
The MOS will be followed by the release of Mining SDK, “a modular toolkit that allows developers to build mining software without recreating device integrations or operational primitives from scratch.” Not yet ready for prime time, the SDK will be finalized and released “in the coming months.”
Tether isn’t the first to launch an open-source mining solution. Last August, Jack Dorsey’s payment processing company Block (NASDAQ: SQ) released its Proto Mining System. Block’s Q3 earnings report said Proto had begun generating its first revenue and “while it is only a modest contributor to the second half of this year, we are actively pursuing a robust pipeline for 2026 and beyond.”
Ardoino echoed this optimism this week by saying Tether’s MOS will “enable new mining companies to enter the ecosystem.” Given the dire state of mining economics, that queue of plucky new miners could prove an awfully short one.
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Source: https://coingeek.com/block-reward-miners-question-future-as-btc-price-hits-15-month-low/
