If bitcoin is in a bear market, the mining industry will see competition sharply increase as profits drop. Mining then becomes a game in which the most agile and well-prepared participants survive while other miners are squeezed out. Some newer corporate mining entities, for example, that started mining in the heat of the recent bull market may already be on the brink of being pushed out of the market, depending on a variety of operating costs.
But small-scale retail miners are a special category in the industry. Independent miners operating at smaller scale — especially at-home miners — can endure adverse market conditions much better than their larger corporate counterparts for reasons explored in this article. With more flexibility, financial independence and price agnostic incentives, retail miners can, in fact, survive almost anything.
Mining Market Conditions
Mining conditions are already significantly less profitable compared to six months ago. Bitcoin’s price is trading over 40% below its latest all-time high and mining difficulty[1] has steadily increased. Hash price, one of the most precise measures of aggregate mining revenue, has fully retracted its gains from the past year, dropping below $0.20[2] in late February for the first time since December 2020.
While some executives at large corporate mining operations might start to sweat if these market conditions continue to worsen, retail miners are different. Over the past two years, Bitcoin mining has seen a historic surge in interest levels for retail mining[3], and because this demographic of miners operates on a wildly different incentive structure than institutional miners, retail miners won’t go away, even though some of their corporate counterparts will inevitably be squeezed out.
What Institutional Miners Want
Big miners care about profit, and that’s pretty much it. When their margins dry
