Bitcoin miners are experiencing significant economic pressures, leading to a wave of “capitulation” as they seek innovative ways to generate additional revenue streams.
Miner capitulation occurs when the costs associated with mining Bitcoin—such as electricity, hardware, and operational expenses—outweigh the revenue generated from mining. This situation forces miners to shut down operations due to unprofitability.
Recent data from CryptoQuant highlights a 7.6% drop in Bitcoin mining hashrate this month, mirroring levels seen during the FTX exchange collapse in December 2022. This decline is largely attributed to Bitcoin’s recent halving, which reduced miner rewards to 3.125 BTC.
Miners are also facing reduced revenues from alternative sources due to decreased network activity. Following the Bitcoin halving, miners initially profited from high transaction fees during the Runes protocol frenzy. However, as network activity slowed, earnings have sharply declined.
As of June 29, daily Rune transactions have plummeted from over 753,000 on April 23 to 21,861, a 90% decrease. Consequently, miners’ earnings from Rune transactions have dropped below 2 BTC in the past week, down from over 1,000 BTC on April 20.
Facing these economic challenges, miners have powered down machines and increased selling activities. Last week, it was reported that miners offloaded approximately 30,000 BTC, valued at $2 billion.
To diversify revenue streams, miners are increasingly exploring opportunities in artificial intelligence (AI) and other Proof-of-Work (PoW) assets. Companies like Core Scientific and Hut 8 have secured substantial funding for AI expansion. Matthew Sigel, VanEck’s head of digital research, noted that Morgan Stanley’s Head of Sustainability Research, Stephen Byrd, sees these moves as indicative of potential profitability in AI ventures.
Marathon Digital, the largest BTC mining company, has also announced its entry into mining Kaspa, a PoW project. The firm reported mining 93 million KAS, valued at approximately $15 million as of June 25.
Bitcoin miners are navigating a challenging landscape marked by declining revenues and increased operational costs. By diversifying into AI and other PoW assets, miners are innovating to sustain profitability and adapt to evolving market dynamics.
