Fred Thiel, chief executive of MARA — one of the largest publicly traded Bitcoin mining companies in North America — said Bitcoin's chance to become a widely used payment method has passed. He made the remarks during a July 23 interview with Natalie Brunell.

Thiel said high-volume commercial transactions require price stability, which Bitcoin cannot currently provide. He argued that the price swings make it difficult for businesses to use Bitcoin for everyday operations, especially in environments that process thousands of transactions per second and operate on thin margins.

“For Bitcoin to function effectively as a payment method, two key elements are crucial: stability in the value of the medium of exchange and the ability to handle a high volume of transactions efficiently,” Thiel said.

He said stablecoins, which are pegged to fiat currencies such as the US dollar, avoid that problem by providing consistent value that businesses can plan around. In his view, that makes stablecoins better suited for high-frequency payment systems, including crypto payments tied to artificial intelligence. Thiel said he expects stablecoins to dominate those use cases going forward. The stablecoin market has grown rapidly, with major players like Tether's USDT and Circle's USDC processing trillions of dollars in annual transaction volume.

Transaction speed is another reason Thiel sees limitations in Bitcoin's role as a payment rail. He said commercial settings often require near-instant settlement to keep operations running smoothly, while Bitcoin's network was not originally designed for that kind of transaction volume. The Lightning Network, a Layer 2 protocol built on top of Bitcoin, was developed to enable faster and cheaper transactions, but adoption for large-scale commercial payments remains limited. By contrast, newer payment rails built around stablecoins are designed for speed and scale.

Thiel's comments reflect a broader shift in how the crypto industry views Bitcoin. Rather than treating it primarily as a currency, many now see it as digital collateral.

Bitcoin's Security Budget and Store-of-Value Role

Thiel also pointed to Bitcoin's security model. He said Bitcoin's original design assumed transaction fees would eventually help fund its security budget, but fees have remained very low. This concern has gained attention following Bitcoin's most recent halving in April 2024, which reduced the block reward from 6.25 to 3.125 BTC, further increasing miner reliance on subsidy versus fee revenue.

“We've seen that transaction fees have remained remarkably low, often at all-time lows,” Thiel noted.

In his view, that suggests the network's incentives are not built around supporting payment volume. Miners currently rely more on block rewards than transaction fees for revenue, which he said reinforces the idea that Bitcoin was not designed for everyday spending.

Instead, Thiel said Bitcoin's strength lies in its role as an asset held outside traditional banking systems. He said investors continue to use Bitcoin to move value across borders quickly, and it can also serve as a hedge against currency devaluation in unstable economies.

Despite his skepticism about Bitcoin as a payment method, Thiel maintained a positive long-term outlook on the asset. “While Bitcoin will undoubtedly continue to exist and serve as a valuable asset for those seeking to hold wealth outside of traditional financial systems, its role as a daily payment method seems unlikely to materialize,” he said.

He added that Bitcoin's usefulness has shifted rather than diminished over time. Institutional interest in Bitcoin as a treasury asset has grown, and more companies now hold it as a hedge rather than a payment tool. Firms such as MicroStrategy and several others have adopted Bitcoin as a primary treasury reserve asset. Thiel said that trend supports his view that Bitcoin's role in finance is evolving, while stablecoins are positioned to fill the payment gap.