Bitcoin Miners are Digging Deep, for Less

As hashrates soar and profits sink, the sector’s business model looks unsustainable.

Bitcoin miners are in a bind. Network difficulty has reached record highs, even as transaction volumes dip.

Profitability fell by 5% between July and August 2025 while fee income shrunk to under $500,000 a day. In traffic terms, the once-bustling blockchain resembles a digital ghost town.

Network difficulty — the measure of how hard it is to solve the puzzles that release new coins — hit 142 trillion hashes per block in late September last year, just as its hashrate (miners’ combined computing power) hit new peaks.

In principle, a high hashrate strengthens network security. In practice, it’s raising costs for miners already squeezed by lower coin prices.

It gets worse. Electricity prices — mining’s single biggest overhead — have climbed at twice the rate of consumer inflation.

That combination of higher costs, lower rewards, and dwindling network activity is eroding miners’ margins. Fee income should provide a cushion, but its evaporating.

Gathering Dust

Big finance is partly to blame. Bitcoin is being steadily hoarded by investment firms and corporations. Its a currency less transacted than stockpiled.

Nearly 5% of all the Bitcoin that will ever exist, more than 1 million coins, is now locked up in the treasuries of listed firms and exchange-traded funds (ETFs).

Coins in cold storage generate no fees, yet three of the ten largest corporate holders are miners themselves: MARA Holdings, Riot Platforms, and CleanSpark.

It’s puzzling. Inflows to miner-linked wallets rose for three weeks in a row in September, reaching levels last seen in 2023. Does miner HOLDL’ing reflect confidence in future price gains or simple reluctance to sell into weakness?

Knots in the Supply Chain

If miners are feeling pressure, so are their suppliers. Bitmain, the Beijing-based behemoth of mining-rig production, faces slowing sales to American buyers. It has tried to put idle inventory to work in its own hosted operations, often courting clients overseas. Not all of those arrangements have gone smoothly.

A lawsuit filed in Texas sheds light on the firm’s American entanglements. Bitmain is suing ORB Energy, a former client that filed for bankruptcy in August, to reclaim 2,700 Antminer rigs it insists were leased, not sold.

Worth more than $5.5 million, the machines sit in a Texas Bitcoin farm that Bitmain staff say they were blocked from accessing. The firm accuses ORB’s chief executive of diverting “thousands” of Bitcoin into personal wallets in the run-up to the bankruptcy.

The fight highlights a deeper challenge: hardware vendors are scrambling for revenue in a market where margins are evaporating, and disputes over ownership and contracts are likely to multiply.

Washington Weighs In

America wants to be the mining capital of the Bitcoin world. Bitmain has responded by setting up manufacturing in America, reducing its exposure to Chinese import tariffs.

Some in Washington are uneasy. Earlier in September, Iowa congressman Zachary Nunn wrote to Treasury Secretary Scott Bessent, warning of “national security considerations” around foreign-owned mining outfits.

He cited both Bitmain and Shanghai-based Cango, which only entered mining last year but already ranks among the top five players by hashrate. Reports suggest Bitmain may be circling Cango through complex shareholdings. Nunn has asked for a review by the Committee on Foreign Investment in the United States (CFIUS).

The added scrutiny reflects a broader concern: control over mining infrastructure could amount to control over a critical layer of the crypto economy. What began as an arcane technical matter has turned into a geopolitical struggle.

A Prisoner’s Dilemma

The economics of mining Bitcoin look stubbornly bleak. The system needs miners to secure its ledger and process transactions. But as costs rise and fees wane, the incentive to keep digging weakens. Unlike the 19th-century gold rush, where higher effort meant higher payoff, Bitcoin miners are harvesting the dregs of a diminishing vein.

A rising hashrate may signal faith in the system’s future. It might alsorepresent sunk costs for capital already deployed in machines that can’t easily be turned off. Farms built with billions of dollars of debt financing cannot simply power down without imperilling lenders and operators alike.

The result is a strange sort of prisoner’s dilemma: each miner keeps hashing, hoping rivals will blink first, yet the collective effect depresses margins further.

Meanwhile, looming halving events, where block rewards are cut in two, threaten to make the squeeze tighter. Unless new sources of demand materialize, or miners diversify into energy trading, the sector risks burning cash for the privilege of keeping Bitcoin’s lights on.

The Take Away

A network designed to be self-sustaining is struggling to sustain those who keep it alive. Treasuries and ETFs may bolster the price by locking coins away, but they do little to generate activity or fees. Suppliers are caught up in lawsuits. Lawmakers are circling. And miners themselves are hoarding, hoping for better days.

Bitcoin’s paradox is that the more miners toil, the thinner their rewards. Unless activity rises or costs fall, the rush for digital gold may leave only a handful of prospectors, chipping away at the blockchain’s barren soil.

Bitcoin Miners are Digging Deep, for Less was originally published in Coinmonks on Medium, where people are continuing the conversation by highlighting and responding to this story.