The profitability of Bitcoin mining has decreased, putting additional pressure on the financial results of companies in the industry. Against the backdrop of declining revenues, more miners are considering the active use of their own cryptocurrency reserves to support their businesses.
This is reported by Business • Media
Declining Profitability and the Search for Alternatives
According to a Wintermute study, the current market cycle has complicated conditions for mining companies — the decrease in profitability forces them to seek new sources of income. Some market participants are already considering a shift to servicing infrastructure for artificial intelligence or selling part of their assets to balance expenses.
Wintermute analysts note that over the years, miners have built significant energy and computing capacities, mostly in regions with affordable electricity. These resources could become in demand for performing tasks in the field of artificial intelligence, as such infrastructure is difficult to scale quickly. At the same time, changing the profile of activity requires significant capital investments, which is a substantial challenge for companies traditionally focused on cryptocurrency mining.
Active Use of Reserves: A New Strategy for Miners
Wintermute calculated that miners control about 1% of the total Bitcoin issuance. However, this model of holding cryptocurrency, which has been inherited from the HODL practice, now appears inefficient.
“Treasury management tools remain largely underutilized. Instead of passive storage of the asset, miners could generate additional income through active balance management,” the Wintermute report emphasizes.
Analysts advise miners to consider options for generating additional profits — for example, through the use of derivative strategies: covered call options and secured put options. It is also possible to earn interest income by placing Bitcoins in lending protocols.
According to Wintermute, companies that begin to view their crypto reserves as working capital rather than mere accumulation will gain a competitive advantage, especially ahead of the next halving.
Experts also emphasize that for the first time in a four-year cycle, the price of Bitcoin did not double after the halving, as it had previously, when price increases compensated for the decline in miners’ revenues. In the current environment, the market for fees remains unstable and does not guarantee consistent coverage of reduced block rewards.
Another factor putting pressure on the industry is the rising cost of electricity. Wintermute believes these changes could serve as a “healthy shock” for the mining industry and, in the long term, contribute to its efficiency improvement.