Back then, Bitcoin’s price collapsed by roughly 94%-95%, while another exceptionally long difficulty downturn in 2021 followed China’s sweeping ban on domestic crypto mining, which forced a substantial portion of global hash rate to relocate. Saifedean Ammous, author of The Bitcoin Standard, noted that the current slowdown has happened without anything remotely comparable.
In an update on mining, which he reshared now, he noted that the current period has become the longest in Bitcoin’s history. His explanation, though, is structural.
In part, he blamed it on Bitcoin’s pre-programmed halvings. Since the block subsidy drops by 50% roughly every four years, $BTC’s price must increase fast enough to compensate miners for the reduction. He estimated that mining economics require the cryptocurrency’s value to appreciate by almost 19% annually over four years, before accounting for dollar devaluation and the growing opportunity cost created by AI infrastructure.
If expected returns are below that threshold, allocating more capital and electricity toward mining becomes progressively less attractive.
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More Lucrative Alternative
Ammous argued that Bitcoin miners no longer have the same monopoly over cheap power and>said it plans to fully exit the Bitcoin mining space by the end of the year and enter 2027 as a dedicated AI and high-performance computing colocation provider. It has already reduced its mining fleet by almost half as it redirects electricity and data-center capacity toward infrastructure customers.
The financial incentive is clear: colocation revenue jumped 58% QoQ to $215.4 million in the third quarter, up from $15 million a year earlier.
However, Ammous doesn’t think this is necessarily bearish for $BTC. In fact, he noted that if mining becomes less attractive than simply holding $BTC, capital that might have gone toward machines, facilities, and electricity could instead flow directly into Bitcoin. He also expects declining electricity consumption to weaken one of the asset’s most persistent criticisms, and that of the network behind it.
