Bitcoin miners are the most caught up in the network’s history, and a new report by Wintermute argues that simply waiting for the next bull is no longer a strategy.
Instead, the company says miners will have to reinvent themselves as infrastructure and treasury managers if they want to reach the next stage.
Wintermute analyst Jasper De Maere says the current mining cycle is structurally different than the one in 2018 and 2022. The Bitcoin design reduces the block rewards by half every four years, but this time the price did not double over the same window, which means that the miner’s money is decreasing in real terms.
Over the past four years, Bitcoin has returned approximately 1.15 times over this period, well below the 10x–20x multiples seen in previous cycles.
In previous cycles, the acquisition of large amounts involved many problems. Miners can rely on bull markets to pull out weak limits after each split.
Today, with institutions, ETFs, and corporate wealth in the mix, Bitcoin trades like a major commodity, and that 20x run is unlikely.
For miners who have built their business on the assumption of perpetual hypergrowth, Wintermute chalks this up to a regime change, not a bad quarter.
Margins are being crushed
Under the hood, Bitcoin mining has a very simple cost structure: power and computation. That flexibility means there aren’t many ways to protect profits if income falls. Wintermute’s analysis shows gross margins in the period peaked at around 30%, a level that marked the bottom during previous bear markets, not the top.
Previous eras saw long stretches where miners enjoyed margins of 70–80%; now, the “good times” look like former depressions.
Work payments also do not save the day. Cost unions tied to cycles of hype and mempool congestion show up on the charts, but they disappear quickly and rarely contribute more than a few percent of a miner’s total income over time.
Wintermute notes that even when you factor in payments, the margin lines for each cycle don’t diverge much, especially in the current era. In other words, the protocol’s built-in “secondary income stream” does not act as a reliable repository.
The AI pivot is an opportunity for the few
One way out of the bottleneck is getting a lot of attention: getting into high-performance computing (HPC) and AI workloads. Big tech firms and AI startups are racing to cover power and data center capacity, and they don’t want to wait five to ten years for a new grid to be connected and built.
Miners, who already control cheap energy and built sites, are a natural shortcut.
Wintermute points out that sites were once valued at around $1–7 per watt as pure mining operations changed hands at around $18 per watt after the repositioning of AI computing, helped by deals like HUT’s work with Google and Anthropic.
Investors in the public markets have rewarded miners who announce reliable AI systems with high valuations and cheap money through equity and convertible debt.
The catch is that not all miners have the quality of space, balance sheet, or operational capacity to turn into a data center business.
Putting Bitcoin “inactive” to work
This is where Wintermute sees a second, less-used lever: effective balance sheet management. Miners collectively hold about 1% of all Bitcoin, a legacy of the “HODL” playbook that dominated previous cycles.
At the same time, many listed miners were selling off parts of their wealth to pay off tight debts and liabilities, some even liquidating their entire holdings.
Instead of letting reserves sit idle until they are thrown into a state of insolvency, Wintermute says miners should treat BTC as an active asset. On the “active” side, that means using derivative strategies like covered calls and hedged positions to get a return on holdings, at the expense of taking on market risk.
On the “passive” side, miners can put coins on lending markets, including the new BTC-wrapped market on Wildcat highlighted by Wintermute, to earn interest income.
Wintermute’s bottom line is that Bitcoin’s design works, but the easy time for miners is over. Difficulties can still be corrected, however they cannot overcome the slow price growth, the unsettled currency market, and the rising energy costs that are eating away at the entire reward block.
The AI pivot will likely reshape the industry’s top tier, turning some miners into full-fledged infrastructure companies.
