Explanation
Mining has become an industry whose margins depend on power prices, difficulty and the coin price. Home mining has not been profitable for bitcoin for years.
The business model
A miner buys machines, signs a power contract and earns block rewards plus transaction fees. The margin is the difference between the reward's value and the cost per kilowatt-hour. Because difficulty rises with total computing power, your share dilutes as competitors expand — making mining a capital-intensive, cyclical industry.
After the halving
Each halving cuts the reward in half. Miners with expensive power or old machines drop out, hash rate temporarily falls and difficulty adjusts downward. Listed miners respond with power contracts, own generation and, recently, leasing capacity to AI data centres.
Key takeaways
- Power price determines profitability.
- Difficulty rises with competition.
- Halvings force restructuring.