Bitcoin miner profitability has fallen to its lowest level on record, raising fresh questions about whether the $60,000 price floor can hold. The estimated daily return for 1 terahash per second of hashing power dropped to $0.28 on Tuesday, down from $0.39 a month ago, according to data from Luxor Hashrate Index. This marks the lowest level ever recorded, and it comes as Bitcoin struggles to maintain support near $62,000.
Why miner margins matter
Mining is the backbone of Bitcoin’s security, but it is also a capital-intensive business. When margins shrink, miners are often forced to sell some of their Bitcoin holdings to cover operating costs, service debt, or fund expansion. The 14-day average net position change for Bitcoin held in miner and mining pool addresses flipped negative in early May and has remained in negative territory since, according to Glassnode data. This suggests miners have been reducing their exposure, adding to the selling pressure that has weighed on Bitcoin’s price in recent weeks.
Also read: Ether faces critical $1,500 test as futures open interest drops 25%
The profitability crunch is not just a function of lower Bitcoin prices. Rising network difficulty and increasing competition from AI data centers for electricity and hardware have compounded the pressure. The Antminer S21 XP Hydro, one of the most efficient machines on the market, now generates an estimated monthly gross profit of just $137 at $0.07 per kilowatt-hour, down from $192 last month. For older, less efficient models, the situation is far worse.
AI infrastructure demand reshapes miner strategy
One of the more significant developments in recent months is the growing demand for AI computing infrastructure. Bernstein analysts have noted that access to electricity, not chips, is now the primary bottleneck for scaling AI data centers. This has prompted some Bitcoin miners to repurpose parts of their power infrastructure for AI workloads, which are currently seen as more stable and lucrative than crypto mining. While this diversification may be positive for individual companies, it also reduces the amount of hashrate dedicated to Bitcoin, potentially affecting network security and transaction processing times.
Also read: Tokenized RWAs surge 589% as Zcash, Galaxy, and Kraken drive crypto news
Institutional flows dwarf miner selling
Despite the bearish narrative around miner sell pressure, institutional spot Bitcoin flows now vastly surpass the amount of BTC that miners produce each day. Data from CoinShares and other sources show that institutional inflows and outflows have become the dominant driver of Bitcoin price action, far outweighing the impact of miner liquidations. This means that even if all miners were to sell their daily production, it would represent a fraction of the volume moved by institutional players. The broader macroeconomic environment, including interest rate decisions and inflation data, remains the more important factor for Bitcoin’s price trajectory.
Bitcoin has traded below its estimated production cost for extended periods before, including more than six months in both 2019 and 2023, according to data from Capriole Investments. In those cases, the price eventually recovered, but only after broader market conditions improved. Whether the current stagnation persists depends more on investor risk appetite and macroeconomic uncertainty than on miner profitability alone.
Conclusion
Record-low miner margins are a warning signal, but they are not a definitive sign that Bitcoin’s $60,000 floor will break. The concentration of hashrate among a few large pools, combined with the shift toward AI infrastructure, adds complexity to the mining space. However, the dominance of institutional flows in Bitcoin markets means that miner selling alone is unlikely to trigger a major downturn. Traders should watch macroeconomic catalysts, such as the upcoming Bank of Japan rate decision and US inflation data, rather than focusing solely on miner behavior.
FAQs
Q1: Why are Bitcoin miner margins at a record low?
Miner margins have fallen due to a combination of lower Bitcoin prices, rising network difficulty, and increased competition for electricity and hardware from AI data centers. The estimated daily return per terahash has dropped to $0.28, the lowest level ever recorded.
Q2: Does miner selling always push Bitcoin prices down?
Not necessarily. While miner selling adds to supply, institutional spot flows now vastly exceed miner output. The impact of miner selling on Bitcoin’s price is relatively small compared to macroeconomic factors and institutional trading activity.
Q3: Should traders be worried about the $60,000 support level?
The $60,000 level is psychologically important, but Bitcoin has traded below its estimated production cost for extended periods before and recovered. The more important factors are broader market sentiment, interest rate decisions, and inflation data. Traders should monitor these macro drivers rather than focusing solely on miner profitability.
Be the first to comment