- The Mining Equilibrium Index is currently at 1.06, indicating miners are above average, but still far from reaching historic highs of 2.5.
- Increased hash rate and capital costs, followed by electricity and infrastructure costs continue to shrink margins for bitcoin miners worldwide
- At the same time that the price of bitcoin has surpassed $110,000, low on-chain volume since 2022 has limited fee revenue, and therefore miners are still special for block rewards
Bitcoin Mining Profitability faces mounting pressure in 2025 as miners grapple with escalating costs and tighter margins despite Bitcoin’s strong price performance. Questions remain over whether current conditions can be sustained or if a wave of capitulation awaits.
Mining Equilibrium Index Tracks the Strain
Industry researcher Joao Wedson introduced the Mining Equilibrium Index (MEI) to measure profitability trends across different market cycles. In a recent X post, he explained that MEI compares short-term revenue per hash against long-term averages.
When the ratio is above 1.0, conditions are favorable. A reading below 0.5 signals stress levels often linked to capitulation or forced hash rate adjustments. This framework helps evaluate whether miners can endure challenging periods without surrendering reserves.
Currently, MEI stands at 1.06. Although this is well above the danger zone, it remains far from the 2.5 highs of 2017 and 2021, when profits surged. The present reading suggests miners are operating in moderately favorable but restrained conditions.
Escalating Costs and Margin Pressure
Despite Bitcoin’s price reaching $110,669 as of this writing , mining profitability has tightened. The rapid increase in the global hash rate requires continuous investment in modern equipment, pushing companies to allocate large sums toward hardware upgrades.
Rising electricity prices and infrastructure demands further strain operations. Alongside this, wages and maintenance expenses contribute to growing overheads. These combined pressures leave miners with slimmer margins compared to past cycles when revenues easily exceeded costs.
Wedson pointed out that on-chain volume has remained low since 2022. With transaction fees failing to boost earnings meaningfully, miners are more dependent on block rewards, which alone may not cover operating expenses in the long run.
Survival or Capitulation Ahead?
The MEI reading suggests that mining remains sustainable for now, but risks are building. If profitability declined nearer to 0.5, widespread capitulation would not only call for miners to liquidate reserves but could increase sell pressure on the wider market.
For many of these companies, survival is a sky-high balancing act of financing infrastructure improvement while enforcing stringent cost control; for stronger miners, they may be able to withstand the squeeze, while weaker miners will be more exposed to narrowing margins and forced exits.
In the past week Bitcoin has shown a specific rally of 1.71% and continues to trade near all time highs, whether this rallies price action has outperformed the associated operational challenges remains to be seen, leaving the mining sector at a crossroad in 2025.
