Bitcoins
Block reward mining’s difficulty rate keeps falling, but mining economics remain dependent on the BTC token’s fiat price, which appears increasingly incapable of honoring its ‘number go up’ reputation.
- Difficulty falls, but so does BTC price
- MARA’s digital gold treasury losing its luster
- How soon before Russia’s illegal miners are fighting in Ukraine?
- Canaan finding Nasdaq not their promised land
The BTC network’s mining difficulty rate fell again on January 22, slipping from 146.5 trillion to 141.7 trillion hashes (guesses required to ‘find’ a new block on the chain and claim the 3.125 BTC token reward). This marks the fifth difficulty drop in a row, but BTC’s price also dropped back below $90,000 on Thursday, halting the token’s brief rally to over $97,000 and once again calling into question mining’s profitability.
As of Thursday morning, the average all-in cost of mining a single BTC (including the periodic need for wholesale replacement of ASIC mining rigs as rivals install newer, faster versions) was nearly $99,000, about $10,000 higher than the token’s current fiat value.
Last week, BTC’s hashrate (total computing power directed to maintaining network security) dipped below 1,000 exahashes per second (EH/s), touching lows not seen since last September. While that number has since rebounded above 1,000 (likely due to the brief BTC price surge), there’s reason to believe it will continue to shrink over time.
For one thing, more and more miners are diversifying their operations to serve as data centers for AI/high-performance computing (HPC) companies. Some miners have already ditched or are planning to ditch mining entirely in favor of the more reliable/predictable revenue streams that AI/HPC promises.
This has apparently convinced a growing number of miners to stop releasing their monthly BTC production figures in a bid to convince investors that they’re no longer saddled to BTC’s uncertain economics.
The ‘pivot’ to AI has decreased demand for new ASIC rigs, pushing ASIC manufacturers to use newly made rigs to mine BTC on their own. Bitdeer (NASDAQ: BTDR) has significantly boosted its self-mining operations in recent months, claiming a self-mining hashrate of 55.2 EH/s in December, up from just 8.5 EH/s in December 2024. Over that same period, Bitdeer’s number of self-owned rigs under management has nearly doubled to 211,000.
Combined with Bitdeer’s hosted mining operations for third-party clients, the self-mining surge is believed to have allowed Bitdeer to eclipse MARA (NASDAQ: MARA) in terms of overall hashrate. Bitdeer’s ‘total hash rate under management’ hit 71 EH/s in December, while MARA’s metrics cite a 60.4 EH/s figure.
MARA focusing more on energy development, less on buying BTC
MARA ranks second (first among miners) on the list of BTC ‘treasury’ firms with 53,250 tokens, much of that total bought by taking on billions of dollars in new debt. Despite this treasury’s fiat value currently sitting around $4.75 billion, MARA’s mNAV (the ratio of its BTC value compared to its market capitalization) is below the 1.0x benchmark (its ‘mNAV diluted’ figure is ~1.4x).
Some of MARA’s debt-funded BTC buys are distinctly underwater, like its November/December 2024 purchases of 15,574 BTC for $1.53 billion at an average price of ~$98,529. At today’s price, that investment is around $156 million in the red. For 2024 as a whole, MARA bought 22,065 BTC at an average price of $87,205, only a couple of grand above the current price.
In late-July 2025, MARA raised another $950 million in new debt, it said would be used to acquire additional BTC (and for general corporate purposes). At the time, BTC was trading at around $118,000, nearly $30,000 above its current price. However many tokens MARA acquired with that new debt, they’re likely not worth anywhere near what the company paid to acquire them.
Being so closely associated with BTC hasn’t done MARA shareholders much good, as the company’s stock price has fallen nearly 50% over the past year. Small wonder then that MARA seems keen to diminish its public perception as a pureplay miner and talk up its growing AI/HPC and power generation operations.
Earlier this month, MARA CEO Fred Thiel went on the Bitcoin Rails podcast to discuss the future of mining as AI’s popularity and power demands surge. In an accompanying MARA blog post, Thiel’s vision is described as “land, power, and operational control determine who can scale.” This belief has led MARA to shift its previous reliance on third-party site hosting to the current situation in which ~70% of MARA’s compute runs on sites it owns/operates.
AI might be the new hot chick at the bar, but Thiel believes mining has an advantage over AI in that miners have the ability to curtail their activity when it makes economic sense to do so. By contrast, AI/HPC operators require constant connectivity if their output is to remain at the level that consumers expect and demand.
MARA wants to tap into “stranded energy markets overseas” by expanding its international operations, part of the company’s goal to generate half of its future revenue internationally. While nearly all of MARA’s operations are stateside, it has smaller bases in the United Arab Emirates, Paraguay, and Finland.
MARA is using some of the excess heat generated by its two Finnish mining sites to help heat thousands of homes in the Nordic nation. Apart from helping to reduce its local environmental impact, MARA’s chief strategy officer Adam Swick noted that the company also generates revenue from the districts in which the homes are heated.
Other miners looking to add a little ‘green’ to their operations/reputations have embarked upon similar heat-reclamation projects, including helping to dry codfish caught in a Norwegian village, as well as the recent pilot by Canaan Inc. (NASDAQ: CAN) to help grow tomatoes in the dead of Canadian winter.
Russia to drop the hammer (and sickle) on illegal miners
Just over the Finnish border, Russian officials are struggling to deal with the number of illegal miners draining local energy grids. While Russia permits individuals to mine BTC, it has also imposed restrictions on mining in some far-flung geographic regions, particularly during the frigid winter months of high energy demand.
Last year, Russia began requiring miners to register their ASICs so the authorities could track their activity (and collect taxes). But uptake has been slow, so the government’s gloves are now coming off. In the dying days of 2025, Russia’s Ministry of Justice unveiled a proposal to amend the criminal code and dramatically boost penalties for mining without authorization.
The text of the proposed changes warns that unregistered miners and/or those providing mining infrastructure services could face stiff financial penalties, imprisonment, and/or years of (presumably) breaking rocks with a pickaxe.
If an individual’s actions cause “major damage to citizens, organizations or the state, or are associated with the extraction of income on a large scale,” they could face fines ranging from RUB1.5 million (US$20,000) to two years’ forfeiture of “the amount of the wages or other income of the convicted person.” They could also face up to 480 hours of “compulsory labor” or up to two years of “forced labor.”
(In Russia, ‘compulsory’ labor is somewhat non-custodial, whereas ‘forced’ labor basically makes you a prison slave. As in Soviet times, those sentenced to forced labor can find themselves in Siberian ‘correctional centers.’ And if they’re really unlucky, they might find themselves on the front lines in Ukraine.)
Repeat offenders, organized groups and/or those who cause “particularly large-scale damage to citizens, organizations or the state,” or who made illegal profits “on an especially large scale,” could face fines of up to RUB2.5 million, forfeiture of up to three years of their wages, or five years of forced labor.
As of January 13, the bill has passed the public discussion and anti-corruption assessment stages. But a different effort has now arisen in the Duma (Russia’s parliament) as four deputies—including the heads of the Energy and State Finance committees—introduced a bill that features higher financial penalties (up to $66,000) for illegal miners but no prison time.
The deputies want the bill reviewed promptly in order to protect the nation’s energy grid from excess ‘wear and tear.’ This unauthorized usage is allegedly damaging the economy to the tune of over RUB10 billion ($132 million) per year, while also depriving the state of RUB9 billion ($118 million) in tax revenue.
Canaan on Nasdaq notice again
The harsh economics of mining are definitely putting pressure on smaller mining operators who lack the ability to raise sufficient funds to make their own AI ‘pivot.’ MARA’s Thiel believes mining will continue to “centralize” around larger operators/pools, which doesn’t offer much hope for mining’s minnows.
Take Canaan, which habitually ranks last in the monthly production tallies of publicly traded miners. On January 16, Canaan announced that it had fallen out of compliance with Nasdaq rules that prohibit listed companies from trading below $1 per share for 30 consecutive business days.
Canaan has been given 180 days (until July 13) in which its shares must close above $1 for 10 consecutive business days. Failure to clear this fiscal hurdle by that deadline—or to negotiate additional time in which to regain compliance—means Nasdaq will issue notice that the company is subject to delisting.
This isn’t the first time Canaan has been put on notice, having received a similar warning last May. The autumn surge in BTC’s fiat price pushed Canaan’s shares back up over $1 for a couple of months, but BTC’s subsequent decline brought Canaan back down to earth. As it said last spring, Canaan said it will again “take all reasonable measures” to regain its Nasdaq compliance.
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