Bitcoin miners are caught in the tightest squeeze of the network’s history, and a new Wintermute report argues that simply waiting for the next bull run is no longer a strategy.
Instead, the firm says miners will have to reinvent themselves as infrastructure and treasury managers if they want to make it to the next halving.
Wintermute analyst Jasper De Maere says the current mining cycle is structurally different from prior ones in 2018 and 2022. Bitcoin’s design cuts block rewards in half every four years, but this time the price has not doubled over the same window, which means miner revenue is shrinking in real terms.
On a rolling four‑year basis, Bitcoin has only returned about 1.15x in this epoch, far below the 10x–20x multiples seen in earlier cycles.
In past cycles, huge price gains covered up a lot of problems. Miners could count on bull markets to bail out weak margins after each halving.
Today, with institutions, ETFs, and corporate treasuries in the mix, Bitcoin trades more like a mainstream macro asset, and those explosive 20x runs are less likely.
For miners that built their business on the assumption of permanent hypergrowth, Wintermute frames this as a regime change, not a bad quarter.
Margins are getting crushed
Under the hood, Bitcoin mining has a very simple cost structure: energy and compute. That simplicity means there are not many ways to protect profits when revenue falls. Wintermute’s analysis shows gross margins in this epoch peaked around 30%, a level that marked the bottom during prior bear markets, not the top.
Earlier epochs saw long stretches where miners enjoyed 70–80% margins; now, the “good times” look more like prior stress points.
Transaction fees are not saving the day either. Fee spikes tied to hype cycles and mempool congestion show up on charts, but they fade fast and rarely contribute more than a few percent of total miner revenue over time.
Wintermute notes that even when you include fees, the margin lines for each cycle barely move apart, especially in the current epoch. In other words, the protocol’s built‑in “second revenue stream” is not acting as a reliable backstop.
The AI pivot is an opportunity for a few
One path out of the squeeze is getting plenty of attention: pivoting into high‑performance computing (HPC) and AI workloads. Big tech firms and AI startups are racing to lock in power and data center capacity, and they do not want to wait five to ten years for new grid connections and construction.
Miners, who already control cheap power and built‑out sites, are a natural shortcut.
Wintermute points out that sites once valued at roughly 1–7 dollars per watt as pure mining operations have changed hands at close to 18 dollars per watt after being repositioned for AI compute, helped by deals like HUT’s work with Google and Anthropic.
Public‑market investors have rewarded miners that announce credible AI plans with higher valuations and cheaper capital through equity and convertible debt.
The catch is that not every miner has the location quality, balance sheet, or operational capacity to turn into a data‑center business.
Putting “idle” Bitcoin to work
That is where Wintermute sees a second, underused lever: active balance sheet management. Miners together hold close to 1% of all Bitcoin, a legacy of the “HODL” playbook that dominated earlier cycles.
At the same time, many listed miners have been selling down parts of their treasuries to cover tighter margins and debt, with some even wiping out holdings altogether.
Instead of letting reserves sit idle until they are dumped in a liquidity crunch, Wintermute argues miners should treat BTC like a working asset. On the “active” side, that means using derivatives strategies such as covered calls and cash‑secured puts to earn yield on holdings, at the cost of taking some market risk.
On the “passive” side, miners can deploy coins into on‑chain lending markets, including a new wrapped‑BTC market on Wildcat that Wintermute has highlighted, to generate interest income.
Wintermute’s bottom line is that Bitcoin’s design is working, but the easy era for miners is over. Difficulty can still adjust, yet it cannot overcome slower price growth, a fee market that has not scaled, and rising energy costs that eat into every block reward.
The AI pivot will likely reshape the upper tier of the industry, turning some miners into full‑blown infrastructure companies.
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