Fred Thiel, CEO of MARA, said the Bitcoin mining industry is a challenging and evolving sector, and only miners that can access affordable and reliable energy or adopt innovative business strategies will continue to thrive.
Thiel made these remarks while acknowledging that the Bitcoin mining industry faces challenges due to intense competition, increasing energy demand, and decreasing energy demand. profit.
In an interview, the CEO called Bitcoin mining a zero-sum game. Thiel explained that as more individuals participate, it becomes more difficult for others. This is because profits are decreasing and the lowest cost is money spent on energy, he added.
MARA CEO expresses concern over the situation surrounding the Bitcoin mining industry
Thiel has noticed that some mining companies are shifting their focus to related areas such as artificial intelligence and the development of high-performance computing (HPC) systems.
According to his discoverysome companies are struggling because they can’t keep up with companies that operate their own hardware at minimal cost, such as large manufacturers and companies like Tether.
“Hardware suppliers are running their own mining businesses because customers aren’t buying as much equipment,” Thiel said. Based on his argument, the global hashrate continues to skyrocket, impacting and shrinking everyone else’s profits.
Given the serious nature of this situation, MARA CEO warned that the situation could get even worse for miners after the next Bitcoin halving in 2028. At this time, the block reward to miners will be reduced to approximately 1.5 BTC per block.
Therefore, Thiel warned that if transaction fees do not increase or the price of Bitcoin does not rise significantly, mining could become futile for many.
To further explain his point, he argued that Bitcoin was designed with the idea that transaction fees would eventually replace subsidies. However, Thiel said this idea has not yet materialized, leading him to conclude that unless Bitcoin grows by more than 50% annually, it will become difficult after 2028, and even more so in 2032.
On the other hand, analysts have found that the industry has seen a temporary increase. Still, sources say transaction fees on the Bitcoin network are generally low, although there have been some temporary price increases. According to these sources, recent rate increases such as those under Inscription and Ordinal have not lasted long enough to replace block subsidies.
Thiel believes the mining market will eventually balance itself out
Thiel said miners will need to pay close attention to new developments, such as banks purchasing block space in advance to ensure security. Priority in trading. According to the CEO, the move is game-changing for the industry, but nothing is certain yet.
In such a scenario, small-scale miners are under extreme stress. Large companies will adapt by controlling energy sources and investing in private AI infrastructure, while small and medium-sized businesses may be forced to shut down.
To address this issue, Thiel said he plans to keep production costs at a minimum of 25%. Once this percentage was set, MARA’s CEO asserted that in a tough mining market, 75% of competitors would have to close before that.
Looking to the future, Thiel believed that the market would eventually balance itself out as miners hit their profit margins. However, he noted that this limit is rising rapidly. “By 2028, we will either have to generate our own electricity, be owned by a power generation company, or partner with a power generation company,” he said. “The time to be a grid-connected miner is running out.”
The smartest crypto minds are already reading our newsletter. Do you want to join? Please join us.