Bitcoin miner reward squeeze: Avalanche’s Emin Gün Sirer warns of long-term security risk
Avalanche founder Emin Gün Sirer says Bitcoin miner reward problems could become a long-term security issue as Bitcoin miner rewards shrink after each halving. He warns that up to 20% of Bitcoin miners may be unprofitable.
The core debate is whether transaction fees can replace falling Bitcoin miner rewards. Bitcoin miners earn block rewards plus fees, but block rewards drop by half at every halving. If fee revenue growth can’t keep pace with miner costs, network security and hashrate stability could be pressured.
The article cites CoinShares estimates that 15%–20% of the global mining fleet may be unprofitable under current conditions, with older, higher-power-cost machines facing the biggest risk. CoinShares also reported Q4 2025 was the hardest quarter since the April 2024 halving, hashprice near five-year lows, and listed miners’ average cash cost for one Bitcoin around $79,995.
Sir er also floated a technical idea: using a “pre-consensus layer” to reduce load on the base network. However, major protocol changes may face resistance from a community that typically prefers limited changes to Bitcoin’s security model. Sirer’s claim that the miner reward issue could matter more than quantum computing remains contested and depends on future fees, hardware efficiency, miner costs, and BTC price.
Bearish
The article highlights a direct downside risk to Bitcoin’s mining economics: shrinking Bitcoin miner rewards could make a meaningful share of miners unprofitable (15%–20% per CoinShares; up to 20% per Sirer). Historically, when mining profitability compresses, it can lead to higher operational stress, slower equipment turnover, and more marginal hashrate participation—factors that traders often read as potential security/volatility risk, even if the network doesn’t immediately fail.
In the short term, this kind of warning tends to pressure sentiment around BTC security and can raise demand for hedges or rotation into perceived “fee/stability” narratives. In the longer term, market impact depends on whether transaction fees can progressively offset Bitcoin miner rewards declines and whether hardware efficiency gains counterbalance electricity costs. If fees do not rise enough, the probability of sustained profitability compression increases, which can weigh on long-run confidence.
Sirer’s suggestion of a pre-consensus layer is a secondary variable: it could improve throughput/efficiency, but the likelihood and timing of protocol-level changes are uncertain. Given Bitcoin’s typically slow pace for security-model-changing upgrades, traders may price in caution before any concrete mitigation arrives. Overall, the news reads more bearish than neutral because it focuses on mining profitability and security budget uncertainty rather than a confirmed technical fix.