Bitcoin miners are caught in the tightest squeeze in the network’s history, and a new Wintermute report claims that simply waiting for the next bull run is no longer a strategy.
Instead, the firm says miners will have to reinvent themselves as infrastructure and financial managers if they want to weather the next halving.
Wintermute analyst Jasper De Maere says the current mining cycle is structurally different from previous ones in 2018 and 2022. Bitcoin’s design halves block rewards every four years, but this time the price hasn’t doubled over the same window, meaning miners’ revenue is falling in real terms.
On a rolling four-year basis, Bitcoin has returned only about 1.15x in this era, well below the 10x-20x multiples seen in previous cycles.
In previous cycles, huge price gains masked a lot of problems. Miners could count on bull markets to salvage weak margins after each halving.
Today, with institutions, ETFs and corporate government bonds in the mix, Bitcoin trades more like a regular macro asset, and these explosive 20x runs are less likely.
For miners who built their business on the assumption of permanent hypergrowth, Wintermute frames this as a regime change, not a bad quarter.
Margins are being crushed
Under the hood, Bitcoin mining has a very simple cost structure: energy and computer. That simplicity means there aren’t many ways to protect profits when revenue falls. Wintermute’s analysis shows that gross margins in this era peaked around 30%, a level that marked the bottom of previous bear markets, not the top.
Previous eras saw long stretches where miners had 70-80% margins; now the “good times” look more like past stress points.
Transaction fees don’t save the day either. Fee spikes tied to hype cycles and mempool congestion appear on charts, but they fade quickly and rarely contribute more than a few percent of total miner revenue over time.
Wintermute notes that even when you include fees, the margin lines for each cycle barely budge, especially in the current era. In other words, the protocol’s built-in “second revenue stream” does not act as a reliable backstop.
The AI ​​pivot is an option for a few
One way out of the jam is to get lots of attention: pivoting into high-performance computing (HPC) and AI workloads. Big tech companies and AI startups are racing to lock in power and data center capacity, and they don’t want to wait five to ten years for new grid connections and construction.
Miners who already control cheap power and developed sites are a natural shortcut.
Wintermute points out that sites that were once valued at around $1-$7 per watts as pure mining, has changed hands at close to 18 dollars per watts after being repositioned for AI compute, helped by deals such as HUT’s work with Google and Anthropic.
Public investors have rewarded miners who announce credible AI plans with higher valuations and cheaper capital through equity and convertible debt.
The catch is that not all miners have the location quality, balance sheet or operational capacity to become a data center company.
Putting “idle” Bitcoin to work
This is where Wintermute sees another, underutilized lever: active balance control. Miners collectively hold close to 1% of all Bitcoin, a legacy of the “HODL” playbook that dominated previous cycles.
At the same time, many listed miners have been selling down parts of their treasuries to cover tighter margins and debt, with some even wiping out holdings entirely.
Instead of letting reserves sit idle until dumped in a liquidity crunch, Wintermute argues that miners should treat BTC as a working asset. On the “active” side, this means using derivative strategies such as covered calls and cash-backed puts to earn returns on holdings at the expense of taking on some market risk.
On the “passive” side, miners can deploy coins to on-chain lending markets, including a new wrapped-BTC market on Wildcat that Wintermute has highlighted, to generate interest income.
Wintermute’s bottom line is that Bitcoin’s design works, but the easy era for miners is over. Difficulty can still be adjusted, yet it cannot overcome slower price growth, a fee market that does not scale, and rising energy costs that eat away at each block reward.
The AI ​​pivot is likely to reshape the top tier of the industry and turn some miners into full-fledged infrastructure companies.