Bitcoin Mining at a Crossroads: Soaring Energy Costs Collide with Historic Fee Squeeze

Bitcoin's backbone is cracking under pressure—miners now face a brutal combo of skyrocketing power demands and fees at rock-bottom levels.

Power play turns desperate

The network's energy appetite keeps growing faster than a DeFi yield farm in 2021, while transaction fees—miners' lifeblood—have plunged to record lows. This isn't just unsustainable, it's financial Russian roulette with ASICs.

Fee famine hits hard

With block rewards halving again last year, miners were counting on fees to pick up the slack. Instead, they're getting paid in pocket lint—just as energy costs hit new highs. Some operations are already flipping the off switch.

The irony? Wall Street's suddenly all over Bitcoin ETFs while the infrastructure supporting it starts to fray. Typical finance—betting on the race while ignoring the collapsing track.

Steepest decline since 2021

The accelerating energy use comes as the network’s mining difficulty — an indicator of how hard it is to verify new blocks — has been comparatively subdued. The first half of 2025 saw 13 difficulty adjustments, with the metric rising from 109.78 trillion at the start of the year to 116.96 trillion by the end of June. That represents a year-to-date increase of just 6.54%, with an average monthly climb of 1.09%.

The report frames this slowdown against 2024’s rapid expansion, when difficulty rose 4.48% per month on average. The relative calm in 2025 was punctuated by moments of volatility: a 6.81% upward adjustment on April 5 and a 4.38% increase on May 30 pushed difficulty to an all-time high of 126.98 trillion. But that peak quickly gave way to a sharp reversal.

By late June, heat waves across North America forced some operators to limit activity, sending hashrate down by 147 EH/s. “Bitcoin’s difficulty adjusted downward by -7.48%, the steepest decline since July 2021,” the report noted, drawing a comparison to the post-China mining ban era.

If the network’s power draw is climbing, its transaction LAYER tells the opposite story. On-chain activity in the first half of 2025 has slumped to levels not seen since October 2023. The seven-day moving average of daily transactions also fell to about 313,510 by June 25, with a low of 256,000 confirmed transactions on June 1.

That weakness has translated into historically low fees. Throughout the year, users have been able to broadcast transactions at the bare minimum fee of 1 satoshi per VIRTUAL byte, regardless of priority. “Throughout H1, there were multiple occasions when transactions — regardless of priority level — could be broadcast for the bare minimum fee of just 1 sat/vB, highlighting the persistently low demand for blockspace across the network,” the report said.

Ghosted mempool

The environment has produced a rare phenomenon: a fully cleared mempool. The mempool — a waiting area for unconfirmed transactions — emptied twice in 2025 for the first time in nearly two years. The last comparable event was in April 2023, when Ordinals and BRC-20 token activity had not yet crowded block space to current norms.

When the mempool clears, the report notes, miners briefly operate with “almost no transaction fee revenue,” relying almost entirely on the block subsidy. That dynamic underlines one of Bitcoin’s long-term economic questions. As the fixed subsidy halves roughly every four years — eventually disappearing entirely — the network will rely on transaction fees to sustain miners. Low-fee environments, while welcome for users, can pinch operators already grappling with high energy costs.

For Bitcoin miners, the tension between rising power demand and thinning revenue is becoming harder to ignore. Extreme heat in key U.S. mining regions has already demonstrated the fragility of hashrate under environmental pressure. Meanwhile, the doubling of network energy consumption since early 2024 hints at infrastructure scaling faster than transaction activity or fee income.

Industry observers suggest that this paradox may persist. Mining firms continue to deploy energy-dense fleets to secure the network and capture block rewards, but their long-term economics are tethered to factors outside their control, network activity, user demand for block space, and the pace of Bitcoin’s programmed halvings, which are expected to continue roughly every four years until around 2140, when the final BTC is projected to be mined and the block subsidy drops to zero.