The Reality Bitcoin Miners Face: "Mining Without Profit"

In the Bitcoin market, the focus is not only on the price itself. Rather, it's the underlying infrastructure supporting that price, specifically the mining industry's rapidly depleting strength, that is drawing attention.

According to JPMorgan's analysis, the Bitcoin mining network has become more sensitive to price fluctuations than ever before. Simply put, even a slight drop in BTC prices can cause unprofitable miners to shut down their machines, leading to a decrease in hash rate and a subsequent drop in mining difficulty, with these reactions occurring faster and more intensely than before.

Bitcoin operates on a network without a central administrator. Miners are responsible for approving transactions and generating new blocks, investing substantial electricity and specialized equipment to earn rewards. These rewards come from newly issued BTC and transaction fees, but with the halving event in 2024, block rewards have been reduced by half. While income decreases, costs for electricity, equipment, labor, and maintenance do not easily decline.

As a result, when BTC prices fall below a certain level, miners approach a state where "the more they mine, the more they lose." The current issue is that many operators are nearing this loss threshold.

The original article explains that JPMorgan estimates the production cost of Bitcoin to be around $78,000, with BTC trading below this level. If prices remain below production costs for an extended period, miners with weaker financial resources will not survive. Operators using outdated equipment, those in regions with high electricity costs, and those who have expanded through excessive borrowing will be the first to be squeezed out.

This is not just a problem for individual companies. The entire Bitcoin network operates based on the economic rationality of miners.

What "Sensitivity of Mining Difficulty" Implies

The key point in JPMorgan's analysis is the increased sensitivity of mining difficulty and hash rate to BTC prices.

In the Bitcoin system, miners worldwide compete to find blocks. As the computing power, or hash rate, increases, blocks are found more quickly. Therefore, the network automatically adjusts the mining difficulty approximately every two weeks to ensure that a block is generated roughly every 10 minutes.

Normally, even if BTC prices drop slightly, only a few inefficient miners would stop. However, currently, it is said that more miners are clustered near the breakeven point. This means that even a small price drop can cause a significant increase in the number of operators falling below the profitability line.

This is what is meant by "high sensitivity."

When miners shut down their machines, the hash rate decreases. When the hash rate decreases, the mining difficulty is lowered in the next difficulty adjustment. Lower difficulty makes it easier for the remaining miners to mine. This is Bitcoin's self-adjusting mechanism and the reason the network doesn't easily stop.

However, the issue is the market impact during this process. Miners facing deteriorating profitability may sell their BTC holdings to secure operating funds. Increased sales put supply pressure on the market. If prices drop further, more miners may fall into unprofitability. This could create a vicious cycle of price decline, miner shutdowns, BTC sales, and further price pressure.

This doesn't mean Bitcoin itself will collapse immediately. However, the financial deterioration of miners could become a factor that amplifies market volatility.

BTC Sales by Miners Are Not "Optional" but a "Survival Strategy"

Another point worth noting is the increase in BTC sales by publicly listed mining companies. The original article states that public companies like MARA, CleanSpark, Riot Platforms, Cango, Core Scientific, and Bitdeer sold over 32,000 BTC in the first quarter of 2026.

This is different from a simple profit-taking sale. For miners, BTC is like inventory produced by their business. In a bull market, many companies aim to hold onto mined BTC to expand their balance sheets through price increases. However, if the market deteriorates and cash income is insufficient, they have no choice but to sell their BTC holdings to cover electricity costs, debt repayments, and maintenance expenses.

Thus, the current sales are more akin to cash flow management for business continuity rather than investment decisions based on market outlook.

This is troublesome for market participants because miner sales tend to increase when prices fall. Ideally, selling pressure should weaken during price declines, but miners are instead forced to liquidate. This is perceived as a "miner capitulation," or a phase where miners surrender.

In past Bitcoin markets, miner struggles have often been seen as a sign of bottoming out. Weak miners exit, difficulty decreases, and the profitability of surviving miners improves. If the market recovers afterward, the remaining operators can reap significant profits. This cycle has been observed repeatedly in the Bitcoin market.

However, what sets this time apart from the past is the larger scale of the mining industry, its public listing, and its deep ties to financial markets. Factors such as borrowing, capital raising in stock markets, institutional investor evaluations, and transitions to AI data center businesses cannot be dismissed as simple "weak exits."

Is the Transition to AI Data Centers a Lifeline or a New Risk?

Mining companies in distress are now turning to AI and high-performance computing, known as HPC businesses.

This idea is natural. Bitcoin mining companies already secure large amounts of electricity, have cooling facilities, and possess vast lands and infrastructure akin to data centers. AI model training and inference require substantial electricity and cooling capacity. Therefore, the idea is that converting mining facilities into AI data centers could yield more stable revenue.

In fact, the demand for AI infrastructure is high. Major tech companies and cloud providers face challenges with electricity constraints and data center shortages. From an investor's perspective, the electricity access that mining companies have appears to be an attractive asset.

However, VanEck's analysis indicates that this transition is not straightforward. Converting to AI infrastructure requires massive capital investment, with short-term funding shortages potentially reaching around $50 billion and long-term needs possibly reaching $221 billion. Moreover, announcing contracts and actually providing capacity to customers are separate issues. VanEck points out that only about 25% of leased capacity has been provided.

This has become a major topic on social media. On platforms like X and LinkedIn, some view the AI transition as a new growth story for miners, while others express a more cautious view, stating that the phase of stock price increases based on contract announcements is over, and now construction capabilities and fundraising abilities will be scrutinized.

The AI data center business may generate more stable revenue than Bitcoin mining. However, ASIC machines cannot be directly used for AI computing. The required capabilities differ significantly, including GPU servers, network equipment, cooling facilities, power contracts, customer support, and construction management. While having electricity is an advantage for mining companies, it doesn't automatically make them AI infrastructure companies.

On Social Media, Views on "Crisis," "Selection," and "Buying Opportunity" Intersect

 

Social media reactions to this news can be broadly divided into three categories.

The first is the bearish reaction. On X, posts highlight JPMorgan's figures, such as "BTC is below production cost," "about 20% of miners are unprofitable," and "public miners are selling large amounts of BTC," warning of the mining industry's worsening cash flow. Some voices see the prolonged state of being below production cost as a structural weakness.

In Reddit's anti-Bitcoin communities, there are even harsher views. As halving progresses, mining rewards decrease, and if prices don't rise sufficiently, miners will withdraw. If miners decrease, the network's security will also decline, ultimately shaking the very value of Bitcoin. While this view is quite pessimistic, it raises an undeniable issue that mining economics are directly linked to network security.

The second is the reaction from Bitcoin supporters. They see miner selection as a natural adjustment mechanism built into Bitcoin. If unprofitable miners exit, difficulty decreases, and the profitability of remaining miners improves. The network doesn't stop, and rather, it becomes healthier as inefficient operators are weeded out.

From this perspective, the current decrease in mining difficulty is both a crisis and an adjustment. If prices recover, the current struggles may later be seen as a "sign of bottoming out." In past cycles, miner capitulation phases have often been cited as precursors to market reversals.

The third is the reaction from investors focusing on mining stocks and AI infrastructure investments. On social media, there is a growing view of mining companies not just as BTC mining firms but as "AI data center candidates with power infrastructure." Companies like Hut 8, Cipher, Core Scientific, and TeraWulf, which have AI and HPC-related contracts, tend to attract expectations.

However, there is also caution regarding these expectations. Considering VanEck's pointed-out funding gaps and the low actual provision capacity, there is an increasing opinion that companies announcing AI transitions and those actually operating AI infrastructure for revenue should be viewed separately. On social media, practical comments emphasize the need to verify not only the size of contract amounts but also construction progress, fundraising, customer credibility, and the quality of power contracts.

How Should We View the Impact on Bitcoin Prices?

The mining industry's struggles tend to be a bearish factor for BTC prices in the short term. If miners sell BTC to manage cash flow, selling pressure increases. If investors think "miners are struggling, so the market is also in danger," it can also weigh on sentiment.

On the other hand, it is not necessarily all bearish in the long term. If mining difficulty decreases, the profitability of efficient miners improves. High-cost operators exit, and low-cost operators remain, potentially tightening the industry's overall cost structure. In the past, when the market has leaned sufficiently towards pessimism, it has sometimes been a starting point for rebounds.

However, there is a caveat this time. After the 2024 halving, miners' revenue structures have become more challenging than before. With rewards halved, if transaction fees do not increase sufficiently, miners may become more reliant on BTC price increases. In other words, if prices rise, the problem diminishes, but if prices stagnate, the struggles continue.

Furthermore, public miners are also influenced by stock market evaluations. If BTC prices fall, mining revenues deteriorate, and AI transitions require funding, capital raising through stock issuance or borrowing becomes necessary. However, if market conditions are poor, fundraising costs rise, potentially further diluting shareholder value.

The Misconception of "Is Bitcoin Breaking?"

It's important to clarify that miners' struggles and the immediate stoppage of the Bitcoin network are separate issues.

Bitcoin has difficulty adjustment. Even if miners decrease, the mining difficulty will lower after a certain period, making it easier for remaining miners to find blocks. This allows the network to adapt to changes in the number of miners. Therefore, even if some mining operators withdraw, Bitcoin does not immediately become dysfunctional.

However, a decrease in hash rate theoretically affects network security because the cost of attacks decreases. In reality, Bitcoin's hash rate remains extremely high, and severe security issues may not arise in the short term. Nonetheless, as the miner economy weakens, questions about the economic incentives supporting network security may become more prevalent.

This is the essence of the current news. Bitcoin is not solely driven by technology. It is supported by the economic rationality of miners who pay for electricity, maintain equipment, hire people, and invest capital. If prices fall to levels that break that rationality, even if the network survives through automatic adjustments, the market will experience significant turbulence.

Future Focus: "Price Recovery," "Funding," and "Execution of AI Transition"

Looking ahead, there are three important points to consider.

First, whether BTC prices approach or exceed the estimated production cost. If prices recover, many miners' profitability will improve, and the forced selling pressure of holding BTC will ease. Conversely, if prices remain low, the exit of unprofitable miners will continue, and selling pressure will persist.

Second, the funding capability of mining companies. While public companies can raise funds from the market, it becomes difficult to issue new shares when stock prices fall. To simultaneously repay debts, update equipment, and build AI infrastructure, a strong balance sheet is necessary. In the future, not only "how much BTC was mined" but also "how much cash is held," "how much debt is carried," and "are power contracts favorable" will be more emphasized.

Third, the execution capability of AI transition. The period of being evaluated solely on contract announcements is coming to an end. From now on, the ability to actually construct facilities, provide capacity to customers, and record revenue will be scrutinized. Miners with power infrastructure are in a favorable position, but running an AI data center is a different competition. The gap between companies that can execute and those that end with just a story will widen.

Conclusion: It's Not a Bitcoin Crisis, but the Beginning of Mining Industry Selection

What JPMorgan's analysis indicates is not a simple story of Bitcoin itself ending. Rather, it shows that the mining industry supporting Bitcoin is facing the harsh realities of capital markets.

With the halving reducing income, BTC prices falling below production costs, and inefficient miners sinking into deficits, selling held BTC to survive puts selling pressure on the market. While the transition to AI data centers is attractive, it requires massive funding and high execution capabilities.

It's no wonder opinions are divided on social media. Pessimists see "if miners break, Bitcoin's security will also be shaken." Supporters see it as "a natural selection through difficulty adjustment, leading to healthier conditions." Investors expect "new value from AI transition" while doubting "whether it can actually be built."

The likely answer lies somewhere in between.

The Bitcoin network doesn't stop easily. However, mining companies can easily collapse. If BTC prices recover, the crisis will ease, but if prices don't recover, industry restructuring is inevitable. To understand the future of the Bitcoin market, it's necessary to track not only charts but also mining difficulty, hash rate, miners' BTC sales, and the progress of AI infrastructure transition.

What will determine the next phase for Bitcoin is not just investor enthusiasm. It's how many miners can continue to pay their electricity bills.

Source URL

An article based on JPMorgan's analysis, organizing Bitcoin mining sensitivity, production costs, miner sales, and AI transition.
https://memeburn.com/bitcoin-mining-is-near-a-breaking-point-jpmorgan-just-explained-why/

CoinDesk. A report on JPMorgan's indication that the Bitcoin mining network is becoming more sensitive to price swings.
https://www.coindesk.com/markets/2026/06/22/bitcoin-mining-network-becoming-more-sensitive-to-price-swings-jpmorgan-says

CoinShares. Bitcoin Mining Report for Q1 2026. Used to confirm miner costs, profitability, and the background of AI/HPC transition.
https://coinshares.com/insights/research-data