Bull run terminator? Once the financing flywheel breaks, miners may trigger the next round of epic dumping.

Original Compilation: Luke, Mars Finance

Are you tired of those doomsday posts circulating on Crypto Twitter (CT) lately? What frustrates me even more is the contradiction among people on CT regarding the future of the crypto market. Some are writing obituaries for the great bull market we are experiencing, while others insist that this is just another minor episode in the grand drama of market cycles. I'm just fed up with all of this. As always, everyone has their own theories.

Some signs indicate that this time may indeed be different. For the first time since its inception, the ETF has recorded net outflows of $1 billion for three consecutive days, the funding rate for BTC has reversed, and the sentiment of “buying the dip” has mainly turned into meme images on CT. However, there have been past instances where BTC has pulled back by 25-30% and then set a new all-time high within a few months. Who can determine which script is being played out this time?

But in the field of cryptocurrency, there is a group that does not act based on feelings, astrology, or other blind theories. This is a group of participants that cannot be misunderstood. The first batch of participants on the Bitcoin chain: miners.

After U.S. President Donald Trump announced the first round of reciprocal tariffs on Asian countries, including China (the main source of mining machines), they faced their own struggles. However, their economic reality is mainly related to simple mathematics, including the halving conditions written in the Bitcoin white paper over 15 years ago.

In this week's quantitative analysis, I will show you how miners' profitability has been affected after the sharp decline in BTC prices led to squeezed revenues.

Now, let's get into the main text.

The financial situation of BTC miners is very straightforward: they rely on fixed protocol income to make a living, but have fluctuating real-world expenses. When the market is volatile, they are the first to feel the pressure on their balance sheets. Their income comes from selling the mined BTC, while operating costs are primarily made up of electricity bills generated by the high-intensity computing required for mining.

I spent a week tracking the amount of online payments made to them, the costs incurred to earn that income, how much profit remained after deducting cash expenses, and how much they could actually take home after accounting by the accountant.

TL;DR: The mining industry is struggling and far from thriving with the current BTC trading price below $90,000. Over the past two months, miners' 7-day average income has decreased by 35% from $60 million to $40 million.

@Blockchain

Let me walk you through it from the income side.

The income from Bitcoin is mechanized and encoded in the protocol. Each block has a mining reward of 3.125 BTC, plus an average block time of 10 minutes, producing about 144 blocks per day. That means about 450 BTC is mined every 24 hours. In 30 days, global BTC miners mine 13,500 BTC, which amounts to approximately 1.2 billion dollars at the current BTC price of around 88,000 dollars. Once you divide it by the record-breaking hash rate of 1,078 EH/s (Exahashes per second), that billion-dollar cake dissolves into just 3.6 cents per Terahash of income each day. This is the entire economic basis for maintaining the security of this 1.7 trillion dollar network.

In terms of cost, electricity is the most significant variable as it varies with location and the efficiency of mining hardware.

If you are using modern machines, such as S21 class miners, with an energy consumption ratio of 17 joules/TH, and electricity is cheap, you can still make a cash profit. However, if your fleet relies on old miners or pays higher electricity costs, each hash you calculate is increasing costs. At today's hash prices (affected by network difficulty, Bitcoin price, block subsidies, and transaction fees), an S19 running at $0.06 electricity cost can barely break even. If difficulty increases, prices decline slightly, and heat waves cause electricity costs to surge, the economic situation will further deteriorate.

Let me help you break it down with some numbers.

In December 2024, CoinShares estimates that publicly listed miners will have a cash cost of about $55,950 to produce one BTC in the third quarter of 2024. Today, Cambridge estimates that the cost is around $58,500. Actual mining costs vary by miner. The largest publicly listed Bitcoin miner, Marathon Digital (MARA), had an average energy cost of $39,235 for mining one BTC in the third quarter of 2025. The second largest publicly listed miner, Riot Platforms (RIOT), paid $46,324. Although the trading price of BTC is about 30% lower than its peak, around $86,000, these miners are still doing well. However, this is not the whole picture.

Miners must also consider non-cash items, including depreciation, impairment, and stock-based compensation. These items collectively make mining a capital-intensive business. Once these factors are taken into account, the total cost of mining one BTC can easily exceed $100,000.

MARA uses both internal and third-party hosted hardware to mine BTC. It must pay for electricity, account for depreciation, and set aside custody fees, using only all devices. Rough calculations show that the total mining cost per BTC exceeds $110,000. Even CoinShares estimated the total mining cost at around $106,000 in December 2024.

On the surface, miners' businesses appear robust, with generous cash profit margins and a pathway to positive accounting profits, as well as sufficient operational scale to raise funds at will. However, when you zoom out, you begin to understand why more and more miners choose to hold the BTC they mine, or even buy more BTC from the market instead of selling it.

Strong miners like MARA can cover their costs because they have auxiliary businesses and can access the capital markets. However, many other miners are just one difficulty increase away from falling into losses.

When you put all these together, you will find that there are two scenarios of breakeven coexisting in the world of miners.

The first type is industrial miners operating with an efficient fleet, cheap electricity, and a light capitalized balance sheet. For them, even if the BTC price drops from $86,000 to $50,000, their daily cash flow will only turn negative. Currently, they have a cash profit of over $40,000 per BTC, but whether they can squeeze out any accounting profit at the current price level varies by miner.

The second scenario is that once depreciation, impairment, and stock-based expenses are accounted for, the remaining miners will find it difficult to maintain above the breakeven point.

Even assuming the conservative total cost of producing 1 BTC is between $90,000 and $110,000, this means many miners are already below their economic breakeven point. They can continue hashing because their cash costs have not been breached, but their accounting costs have been breached. This is likely to prompt more miners to hold their BTC now rather than sell.

As long as the economic situation maintains a positive cash flow, miners will continue to mine. At $88,000, the system looks stable, but on the condition that miners do not sell their BTC. Once BTC drops further or miners are forced to liquidate their positions, they begin to approach the breakeven line.

Therefore, although the price crash will continue to affect retail and trading communities, it is currently unlikely to harm miners. However, if financing channels become more restricted, the situation may worsen. That will be the time when the flywheel breaks, and miners will need to increase their investment in auxiliary businesses to survive.