Bitcoin $BTC$71,091.27 Currently around 20% below estimated average production costs, increasing financial pressures worldwide. $BTC mining sector.
According to Checkonchain data, the average cost to mine one Bitcoin is around $87,000, but spot prices are falling towards $70,000. Historically, trading below the cost of production has been a hallmark of bear markets.
Production estimates use network difficulty as a proxy for the industry’s all-in cost structure. By relating difficulty to Bitcoin’s market capitalization, this model provides an estimate of the average mining cost.
In previous bear markets, including in 2019 and 2022, Bitcoin traded below its cost of production, then gradually converged towards it.
Hashrate, which measures the total computational power securing the Bitcoin network, peaked around 1.1 zettahash (ZH/s) in October, but has since fallen by about 20% as inefficient miners were forced offline. Recently, the hash rate has recovered to 913 EH/s, suggesting some stabilization.
However, many miners are still unprofitable at current prices. With revenues falling below operating costs, miners continue to sell their Bitcoin holdings to fund daily operations and cover energy costs and service obligations. This ongoing surrender of miners highlights the persistent stress in the sector.
