Cryptocurrency analyst Joao Wedson pointed out that the Bitcoin mining industry faces increasing challenges in 2025.
According to Wedson, while BTC prices remain high, miners' earnings are still well below the peaks in 2017 and 2021.
Wedson argued that miners have had to invest more in modern equipment due to the rising hash rate, while on-chain transaction volumes have remained low since 2022. He stated that this situation has created additional pressure on the sector.
The analyst announced the development of a new indicator called the Mining Equilibrium Index (MEI) to measure mining profitability. The MEI is calculated by comparing the 30-day average revenue/hash ratio with the 365-day average:
- Above 1.0: above average conditions
- Below 0.5: associated with stressful conditions, capitulation, or hash rate adjustments.
According to updated data shared by Wedson, the index currently stands at 1.06. While this level is well above the critical 0.5, it's still far from the 2.5 peaks seen in 2017 and 2021.
Wedson said the key question for 2025 is whether mining companies can continue to secure the Bitcoin network despite increased competition and operational costs (including employee expenses, electricity, and infrastructure). According to the analyst, miners may be forced to sell some of their reserves if profitability doesn't cover expenses.
*This is not investment advice.
