CEO MARA: Bitcoin miners face tightening profit margins

The Bitcoin mining industry is entering a difficult phase as competition increases, energy costs rise, and profits shrink, according to Fred Thiel, CEO of MARA Holdings.

Thiel warns that small miners are at risk of being eliminated as companies shift towards artificial intelligence (AI) and high-performance computing infrastructure (HPC) to sustain operations. He stated:

“Bitcoin mining is a zero-sum game. As more people increase their power, everyone else has a harder time. Profit margins shrink, and the main profit margin is the cost of energy.”

Fred ThielThe industry is becoming more ruthless, with only those who have cheap and stable energy sources or new business models being able to survive. Some mining companies are expanding into AI or HPC, while others are being eliminated by competitors who own their own hardware at lower costs, including major manufacturers and companies like Tether.

Thiel warns that after the next Bitcoin halving in 2028, when the block reward decreases to less than 1.5 BTC, many current mining models may not be sustainable if the price of Bitcoin or transaction fees do not rise significantly.

“Bitcoin is designed for transaction fees to gradually replace block rewards, but that hasn't happened yet. If Bitcoin doesn't increase by 50% each year, the math will become very difficult after 2028 and even harder in 2032,” Thiel emphasized.

In this context, small miners face significant pressure, while large companies control energy sources and invest in their own infrastructure for AI. Thiel predicts that the market will self-adjust as miners hit profit limits, but this threshold is rising rapidly:

“By 2028, you will either be a power producer, owned by a power producer, or collaborating with them. The day of just plugging mining machines into the power grid is coming to an end.”