The CEO of MARA, Fred Thiel, described the Bitcoin mining industry as a challenging and evolving sector where only miners who can acquire affordable and reliable energy or adopt innovative business strategies will continue to thrive.
Thiel made these remarks after acknowledging that the Bitcoin mining industry is experiencing hardship due to stiff competition, increasing energy demand, and declining profits.
During an interview, the CEO referred to Bitcoin mining as a zero-sum game. Thiel explained that it gets tougher for everyone else when more individuals join in. This is because profit declines, and one’s minimum cost is the funds spent on energy, he added.
MARA CEO raises concerns about the situation surrounding the Bitcoin mining industry
Thiel noticed that several mining firms are shifting their focus to related areas such as artificial intelligence or developing high-performance computing (HPC) systems.
According to his findings, others struggled because they cannot keep up with the pace of those operating their own hardware at minimal cost, such as leading manufacturers and companies like Tether.
“You have hardware suppliers running their own mining businesses since customers are not buying as much equipment,” Thiel stated. Based on his argument, the global hashrate continues to surge, affecting everyone else’s profits, causing them to shrink.
Following the intense nature of this situation, the MARA CEO cautioned that things could worsen for miners after the next Bitcoin halving in 2028. At this time, the block reward for miners will reduce to approximately 1.5 BTC per block.
Therefore, if transaction charges do not increase or if Bitcoin’s price does not escalate significantly, Thiel warned that mining could be profitless for many.
To further explain his argument, he claimed that Bitcoin was designed with the idea that transaction charges would ultimately replace subsidies. However, Thiel mentioned that this idea has not yet materialized, leading him to conclude that if Bitcoin does not increase by 50% or more each year, it will become challenging after 2028 and considerably tougher in 2032.
In the meantime, analysts discovered some temporary increases in the industry. Still, sources declare that, although there have been some temporary increases, transaction fees on the Bitcoin network are generally low. According to these sources, the latest hikes in charges, such as those from inscriptions and Ordinals, have not lasted long enough to replace block subsidies.
Thiel believes the mining industry market will eventually balance itself
Thiel mentioned that miners should pay close attention to new developments, such as banks purchasing block space in advance to ensure priority in transactions. According to the CEO, this move is a game-changer in the industry, but nothing is solid yet.
In such a scenario, smaller miners are extremely stressed. Large entities adapt to the situation by controlling their energy sources and investing in private AI infrastructure, while smaller companies may be forced to close down.
To address this issue, Thiel stated that they plan to maintain their production costs in the lowest 25%. With this percentage in place, the MARA CEO asserted that in a tough mining market, 75% of their competitors will have to close before they do.
Looking forward, Thiel believed that the market would eventually balance itself as miners attain their profit limits. However, he noted that this limit is rising swiftly. “By 2028, you’ll either need to generate power yourself, be owned by a power generator, or team up with one,” the CEO said. “The time for being a miner connected directly to the grid is running out.”
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