MEI Flags Profit Stress for Bitcoin Miners, Sell-Off Risk
Cryptocurrency analyst Joao Wedson introduced the Mining Equilibrium Index (MEI) to assess Bitcoin mining profitability by comparing the 30-day average revenue/hash ratio with the 365-day average. Wedson reports the MEI at 1.06, above the stress threshold (0.5) but far below the 2.5 peaks of 2017 and 2021. Despite high BTC prices, Bitcoin miners face rising operational costs—equipment upgrades, electricity and staffing—while on-chain transaction volumes have remained low since 2022. This squeeze may force Bitcoin miners to liquidate reserves if earnings fail to cover expenses, adding selling pressure to the market. The key question for 2025 is whether miners can sustain network security amid intensifying competition and cost pressures.
Bearish
Wedson’s MEI highlights that Bitcoin miners are operating under profit stress well below historical peaks. The combination of high operational costs—equipment, electricity, labor—and stagnant on-chain activity reduces margins. If miners liquidate reserves to cover expenses, this adds sell-side pressure, weighing on prices. Similar patterns emerged after 2018’s bear market and the 2022 drawdown when miners’ capitulation exacerbated declines. In the short term, expected miner selling could trigger increased volatility and downward price moves. Over the long term, sustained cost pressures and competitive hash-rate growth may force consolidation among mining firms, potentially reducing network decentralization but stabilizing profitability at higher price levels. Overall, the outlook is bearish until profitability recovers.