Bitcoin reached an important milestone: most miners will not be present in the next

The Bitcoin network saw its 20 millionth BTC mined this week, leaving just 1 million coins to pay as rewards to miners.

Milestone Causes Crypto Industry Observers to Take Stock of Rapid Changes bitcoin mining industry and weigh the economics of a changing landscape with expectations of Bitcoin’s performance as an investment.

Mining companies help ensure the bitcoin network and verify transactions, expending vast amounts of energy in a race to solve cryptographic puzzles in exchange for transaction fees and newly created Bitcoin as rewards. It took miners 16 years to mine the 20 millionth coin since Bitcoin’s inception, but it could take about 115 years to unlock the remaining supply, according to Wolfie Zhao, head of research at MagEnergy.

That doesn’t necessarily mean that the Bitcoin mining industry will look the same as it has for the next century. John Todaro, managing director and senior research analyst at Needham & Company, expects many publicly traded miners to abandon Bitcoin mining in 2027 and 2028.

“We believe that a large portion of public Bitcoin miners will sell almost all of their Bitcoin holdings before the end of 2026 as they embark on [capital expenditure] expense related to AI workloads,” he wrote in a recent note shared with Decipher. In other words, Bitcoin mining companies are turning to AI.

All of the publicly traded Bitcoin miners the company covers have allocated a portion of their computing power to high-performance computing, or HPC, and AI. It is a change that has been occurring for years.

And it’s easy to see why, he added.

“The stubbornly low hash price combined with the upcoming halving in 2028 presents a worrying environment for Bitcoin mining operations,” he said. Decipher. “Many operators are currently at or near break-even costs, while NOI margins in HPC are above 80%.”

NOI refers to net operating income, which measures revenue minus operating expenses, excluding financing costs and taxes. Therefore, it is logical that mining companies are adjusting their revenue division to favor better margins.

Ross Gan, head of communications at Bitdeer, said Decipher The company has the technological infrastructure of Bitcoin in its DNA.

Bitdeer, the Singapore-based miner led by Bitmain co-founder Jihan Wu, illustrates the fork in the road facing the industry. Wu helped industrialize Bitcoin mining in the first place: Bitmain, which he co-founded in 2013, once controlled about three-quarters of the global Bitcoin mining chip market. Now Bitdeer is converting several of its facilities into AI data centers while also developing its own next-generation mining hardware.

“The miners who last will be the ones who control more of the stack. We demonstrate how important that is by designing and implementing our own high-efficiency ASICs and ensuring long-term power capacity around the world,” Gan said. “Vertical integration has proven to be one of the clearest markers of long-term survival.”

He added that until recently, Bitcoin had been treated as a key monetization engine that was complemented by an artificial intelligence infrastructure to keep revenues stable in the long term.

“That duality may no longer be a nice thing to have in the future,” Gan said.

HIVE Digital Technologies, formerly HIVE Blockchain, was founded in 2017 and went public that same year on the Toronto Stock Exchange. The company began investing in high-performance computing, or HPC, infrastructure long before many of its competitors. So early, in fact, that it was still generating revenue from Ethereum mining when CEO Frank Holmes mentioned it on an earnings conference call.

“The Ethereum mining margins we experienced during the quarter allowed us to continue upgrading our data center assets in Sweden and Iceland and also diversify our business by beginning to invest in HPC assets,” he said in November 2021.

It wasn’t until a year later that Ethereum developers executed the merger, changing the network from a proof-of-work consensus mechanism to proof-of-stake and making Ethereum mining obsolete.

The Canadian company has built its business around finding creative ways to get energy from hydropower and other types of stagnant energy, Holmes said. Decipher.

“Bitcoin miners have led the world in sourcing surplus and abandoned energy and building Tier I electrical infrastructure at scale,” he said. “There is a huge abundance of energy in the world, especially in water-rich regions like South America and Canada, but the winners will be the operators that can secure it at low cost, structure it around it intelligently, and turn that energy into durable computing infrastructure.”

Even as analysts, like Todaro, predict that some Bitcoin mining companies will begin to close by the end of 2027, Holmes sees the restriction before the next halving event (forecast for mid-2028) as a challenge to become even more efficient.

“Block rewards will decrease, but that doesn’t mean the industry will disappear. It means the bar is raised,” he added. “The miners who survive will be the ones with the best power, the best sites and the most flexibility.”

But what happens to the price of Bitcoin when block rewards go to zero? Investors have known that Bitcoin has had a finite supply since its inception, so in theory it is discounted.

The most apt comparison comes from Bitcoin’s own whitepaper: “The constant addition of a [constant amount] “Generating new currencies is analogous to gold miners spending resources to add gold to circulation,” wrote pseudonymous BTC creator Satoshi Nakamoto in 2008. The comparison has been widely adopted by Bitcoin fans, including BlackRock CEO Larry Fink, Strategy founder Michael Saylor, and even Federal Reserve Chairman Jerome Powell.

The global supply of gold has not yet been exhausted, so investors cannot skip a few chapters to preview what BTC could do in 115 years. But Todaro noted that the very gradual reduction of block rewards should cushion the effects on Bitcoin’s price.

Expect most of the selling pressure to come from newly produced BTC, not long-standing HODLers. And even if Bitcoin miners liquidate their holdings by going out of business, they are no longer the whales they used to be.

“Bitcoin miners don’t have as much Bitcoin on their balance sheets relatively speaking as they have historically,” he said. “They hold ~0.5% of the circulating supply, while Strategy alone holds 7x more BTC than all miners combined.”