Bitcoin miners are under the most intense pressure in the network’s history, and a new Wintermute report argues that simply waiting for the next bull market is no longer a strategy.
Instead, the company said miners will need to reinvent themselves as infrastructure and financial managers to reach the next halving.
Wintermute analyst Jasper De Maere said the current mining cycle is structurally different from previous cycles in 2018 and 2022. Bitcoin’s design halved the block reward every four years, but this time the price did not double in the same period, meaning miners’ profits were actually being reduced.
On a four-year basis, Bitcoin has returned about 1.15x this time, which is much lower than the 10x to 20x multiples of previous cycles.
In past cycles, many problems were solved by massive price increases. Miners can count on a bull market to salvage weak margins after each halving.
Today, with a mix of institutions, ETFs, and corporate treasuries, Bitcoin trades like a mainstream macro asset and the potential for an explosive 20x rise is slim.
For miners who started their business assuming perpetual hypergrowth, Wintermute sees this as a regime change rather than a bad quarter.
Margins are collapsing
Internally, Bitcoin mining has a very simple cost structure: energy and compute. This simplicity means there isn’t much you can do to protect your profits when they decline. According to Wintermute’s analysis, gross margins during this period peaked at around 30%, which was the lowest, not the highest, level of previous bear markets.
In previous eras, there were long periods of time when miners enjoyed margins of 70-80%. Now the “good times” seem more like the stress points they used to be.
Transaction fees don’t solve the problem either. Fee spikes associated with hype cycles and mempool congestion are visible on the charts, but they fade quickly and rarely account for more than a few percent of total miner revenue over time.
Wintermute points out that even including fees, the margin line for each cycle rarely drops, especially in this day and age. This means that the “second revenue stream” built into the protocol does not act as a reliable backstop.
The AI pivot is an opportunity for the few
One way to get out of this difficulty is to get a lot of attention. The move to high-performance computing (HPC) and AI workloads. Big tech companies and AI startups are competing for power and data center capacity and don’t want to wait five to 10 years to connect and build new grids.
With miners already in control of cheap power and built-up land, this is a natural shortcut.
Wintermute points out that the site was once valued at around $1 to $7 per watt, with pure mining operations changing hands at around $18 per watt after HUT was repositioned for AI computing with the help of deals like those with Google and Anthropic.
Public market investors have been rewarding miners who announce credible AI plans with higher valuations and cheaper capital through stocks and convertible bonds.
The problem is that not all miners have the location quality, balance sheet, or operational capabilities to transition into a data center business.
Putting “Idle” Bitcoin to Work
This is where Wintermute looks at a second underused tool: active balance sheet management. Miners hold close to 1% of all Bitcoin. This is a legacy of the “HODL” playbook that dominated early cycles.
At the same time, many listed miners have sold off part of their treasury to cover tighter margins and liabilities, with some even draining their holdings entirely.
Wintermute argues that miners should treat BTC like a working asset, rather than leaving reserves idle until they are disposed of due to a liquidity crisis. The “active” side means using derivatives strategies, such as covered calls and cash-backed puts, to earn returns on your holdings while taking on some market risk.
On the “passive” side, miners can generate interest income by distributing their coins to on-chain lending markets, including Wildcat’s new wrapped BTC market, highlighted by Wintermute.
Wintermute’s conclusion is that Bitcoin’s design works, but the days of ease for miners are over. Difficulty can still be adjusted, but it cannot overcome slow price growth, an unexpanded fee market, and rising energy costs eating away at all block rewards.
The AI pivot is likely to reshape the upper echelons of the industry, turning some miners into full-fledged infrastructure companies.