Written by: Coach Liu

Upon waking up, BTC has once again fallen back to the 67k level.

Recently, Bitcoin miners have been struggling. Each mined BTC incurs a loss of $19,000, and miners are experiencing a historic mass exit. This is not the end of the market, but the harshest and most ingenious self-purification of the PoW mechanism.

According to on-chain data, miners lose an average of $19,000 for every Bitcoin mined. The production cost hovers around $88,000, while the Bitcoin price lingers below $69,000. This overhang of more than 20% hangs like a sword above the miners' heads, forcing them to make a choice: should they tough it out and wait for dawn? Or should they shut down their machines and leave bitterly?

The difficulty of the Bitcoin network has dropped 7.8% continuously over the past two weeks, which is the most honest signal—some are unable to hold on and are shutting down and exiting. Just like soldiers falling en masse on the battlefield, we know the battle has entered its most brutal phase.

This scene seems familiar.

In 2018, Bitcoin fell from $20,000 to over $3,000, and miners were left with nothing, as difficulty plummeted 15%. In 2021, as some universities withdrew, the computing power halved overnight, and difficulty dropped sharply by 25%. Each time, someone shouts that Bitcoin is done for, and each time, Bitcoin has come back and emerged even stronger.

This time is different.

In the past, losses were caused by price crashes and could be weathered through patience. But this time, Bitcoin prices are still in historically high regions; it is the cost structure that is problematic—energy costs have risen, equipment has become more expensive, and operational costs are high. This means that simply waiting for prices to rebound may not save everyone.

More importantly, in this round of crisis, miners hold an additional card: AI computing power.

Names like Hut 8 and Bitfarms have started frequently appearing in the news about AI computing power leasing. They have shifted their clusters from mining to model training, turning formerly power-consuming data centers into money-printing machines for computing output. With the same electricity costs, the revenue from AI computing power leasing may be twice that of mining. The temptation is enormous.

Some joke that miners are about to change careers to become programmers. But reality is not that simple. From ASIC miners to GPU clusters, from mining software to PyTorch, from joining mining pools to connecting with cloud service providers, this is a complete transformation. It requires technology, talent, and, most importantly, patience.

Yet, at its core, this path has not deviated from Satoshi Nakamoto's blueprint.

I mentioned in previous articles that the wonder of PoW (Proof of Work) lies in its construction of an almost insurmountable barrier through massive fixed capital investments. Every penny miners invest and every kilowatt-hour they consume ultimately becomes a part of Bitcoin's value. Those who call Bitcoin "air" may never understand why a seemingly intangible number can be worth so much. The answer lies within those roaring mining machines, those towering cooling towers, in the energy consumed that cannot be recovered.

This is the essence of Nakamoto economics: anchoring the value of the digital world with the costs of the physical world.

From this perspective, transitioning to AI is not a betrayal but an evolution. When miners carve out a portion of their computing power from the Bitcoin network to serve the AI market, they are not betraying PoW; instead, they grant their computational capital greater flexibility. This may actually lead to a healthier mining community, better able to withstand the shocks of price fluctuations.

But everything has a cost.

As a large number of small and medium miners exit, computational power will further concentrate among large mining enterprises. The combined computational power of the two largest mining pools, Foundry USA and AntPool, once exceeded 51%. While this does not mean they will actually launch a 51% attack—because that would be akin to killing the goose that lays the golden eggs—this concentration itself erodes the ideal of decentralization.

What is the essence of decentralization? It is not technology, nor code, but the dispersal of power. Satoshi Nakamoto established the group of PoW miners to create a balance between the two centers of power: computational power and capital. If one day, the mining group disappears or completely becomes a vassal of capital, then the robustness of Bitcoin must face a significant question mark.

So, the current situation is quite interesting.

On one side is the brutal purification of PoW, eliminating all inefficient players, making the industry healthier. On the other side is the re-concentration of power, putting the ideal of decentralization to the test of reality. The AI transition acts like a shot of adrenaline for the mining community, providing them with more chips to survive in future competitions.

Looking back now, those miners who knelt at the $60,000 line might be becoming a signal of the market hitting the bottom. When even the group closest to the production end begins to panic sell, it is often the time to be most greedy. Of course, this is said to be "often," not "necessarily."

But one thing is certain: this crisis is not the end of Bitcoin but a necessary step for the industry's maturation. It will filter out the players with the most optimal costs and the most flexible strategies, letting them thrive in the next cycle.

For us ordinary observers and participants, instead of being carried away by panic, perhaps it is better to read Satoshi Nakamoto's paper, reflect on the essence of PoW, and understand what Nakamoto economics is really about. When you truly grasp these concepts, you won’t easily be intimidated by the noise of things going to zero.

The bottom of Bitcoin has never been a certain number, but is forged from the beliefs, capital, and sweat of countless people. As long as this bottom remains, Bitcoin will endure. And those who sold at the bottom and panicked out will likely never understand why the price always rises right after they sell.

So, miners have knelt, but don’t panic. Those who should kneel will eventually have to kneel. Those who should remain will always stay.

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