Bitcoin is now approx. 20% below estimated average production costs, increasing financial pressure across the BTC mining sector.
The average price to mine a bitcoin is around $87,000 according to data from Checkonchain, while the spot price has fallen towards $70,000. Historically, trading below production costs has been a hallmark of a bear market.
The production estimate uses network difficulty as a proxy for the industry’s all-in cost structure. By linking difficulty to bitcoin’s market value, the model provides an estimate of average mining costs.
In previous bear markets, including 2019 and 2022, bitcoin traded below the cost of production before gradually converging back towards it.
Hashrate, which measures the total computational power securing the bitcoin network, peaked near 1.1 zettahash (ZH/s) in October, and subsequently fell by about 20% as less efficient miners were forced offline. Recently, the hash rate has returned to 913 EH/s, suggesting some stabilization.
But many miners remain unprofitable at current prices. With revenues below operating costs, miners continue to sell bitcoin holdings to fund day-to-day operations, cover energy costs and service debt. This ongoing miner capitulation highlights ongoing stress in the sector.
