Sam Tabar, CEO of Bit Digital, has made a bold prediction: he believes the commercial Bitcoin mining industry is likely to collapse in the next two years, though he stressed that mining itself will continue.
His reasoning includes several key points:
- Following the next Bitcoin halving (expected around April 2028), the block rewards will be cut again, further squeezing miners’ revenue.
- The entry of sovereign states into Bitcoin mining could shift dynamics. Governments, especially those with state-owned electricity or hydroelectric surplus capacity, may have cost advantages that private miners cannot match.
- Rising operating costs, energy costs, infrastructure, and increasing network hashrate will make small and medium commercial miners especially vulnerable.
Why This View Is Gaining Attention
- Halving events are known stress points: Every ~4 years, the Bitcoin protocol halves the reward paid to miners for each block. This reduces revenue from block rewards unless offset by price increases or efficiency gains. Tabar says the last halving was already a “disaster” for many.
- Energy/Electricity Cost Disparities: Sovereign entities that control electricity generation (or have surplus renewable power) can mine at very low marginal cost. Tabar argues this gives them a competitive edge in the future when margins get tight.
- Bit Digital’s Strategic Shift: Bit Digital itself is moving away from large-scale mining operations in favor of other crypto strategies (e.g. Ethereum treasury holdings). This move reflects how they view the commercial viability of mining in the near future.
Counterpoints & Risks to Tabar’s Prediction
- Not all agree this bleak outcome is inevitable. Some analysts believe innovation (more efficient mining hardware, better cooling, improved power sources) can help keep margins viable. TradingView
- The assumption that sovereigns will enter mining en masse depends on many factors: policy, regulatory environment, capital investment, and infrastructure. These transitions are not friction-free.
- Bitcoin’s price plays a big role: if the price per BTC rises sharply, reduced block rewards might be offset. Also, changes in energy cost, power subsidies, or energy policy could influence outcomes.
Implications If Tabar Is Right
- Many commercial miners could be forced to exit or consolidate, especially those in high-electricity cost areas or those dependent on third-party power supply.
- Nodes of concentration might shift: mining might become more centralized under states or large vertically integrated entities with cheap power.
- Capital investment requirements will increase: to stay in business, miners would need extremely efficient rigs, favorable power contracts, possibly renewable or surplus energy.
- Potential regulatory or tax shifts: governments may adjust policy in response to this transition, possibly offering incentives or regulating power use strictly.
What to Watch Next
| What to Monitor | Why It Matters |
|---|---|
| Bitcoin Price Movement | If BTC price rises sharply, it could buffer miners against halving effects. |
| Technological Innovation in Mining Hardware | More efficient rigs could reduce costs per hash significantly. |
| Energy Policy / Subsidies | Governments’ role in supply of cheap power could determine who survives. |
| Entry of Sovereign Miners | Which countries, how much hashrate, and under what terms. |
| Commercial Miners’ Financials | Watch for shrinking margins, defaults or exit signals. Bit Digital itself is winding down US, Canada, Iceland mining infrastructure. |
