Energy Costs and AI Demand Squeeze Bitcoin Mining Margins Before 2028 Halving
Bitcoin mining faces a squeeze as rising energy costs and growing AI computing demand drive up power prices, eroding mining profitability across the sector. MARA Holdings CEO Fred Thiel warns that smaller operations without access to ultra-low-cost power risk being squeezed out. Leading miners are repurposing spare capacity for AI hosting and high-performance computing services to diversify revenue and offset shrinking Bitcoin mining margins. Companies are also forging strategic energy partnerships and investing in on-site generation to secure stable power. With the next Bitcoin halving in 2028 set to cut block rewards to 1.5 BTC, analysts predict only miners with flexible infrastructure, diversified services, or proprietary power sources will remain profitable post-halving.
Bearish
Tightening Bitcoin mining margins driven by higher energy costs and increased AI compute demand will likely force smaller miners to sell assets or exit, increasing short-term selling pressure on BTC. Over the longer term, the 2028 halving’s reduced block rewards and industry consolidation around low-cost power sources may sustain negative sentiment as profitability narrows for most operators. While diversified services and strategic energy partnerships could stabilize top miners, overall market impact leans bearish due to reduced miner margins and potential sell-offs.