TL;DR:
- The average cost to produce one Bitcoin has climbed to $87,000, according to Checkonchain data.
- Bitcoin is trading approximately 20% below its production cost, a historical indicator of bear markets.
- Miner capitulation is forcing companies to sell their reserves to cover operating expenses and debt.
The digital asset mining segment is also in crisis, as the Bitcoin mining cost exceeds the price on exchanges. With a market value hovering around $70,000, miners are operating with negative margins against an estimated production cost of $87,000.
This is a pattern previously observed in bear markets of past cycles, such as 2019 and 2022, where the spot price temporarily decouples from energy costs. Consequently, financial pressure is pushing less efficient players toward insolvency or technical shutdowns.
Impact on Hashrate and Institutional Miner Capitulation
The network’s computational power, or hashrate, has dropped 20% from its October highs, meaning less profitable machines have been taken offline. Although a slight stabilization was recently observed, the majority of miners still fail to reach the break-even threshold.
Since revenues are lower than operating expenses, mining companies are being forced to liquidate their BTC holdings. This constant sell flow adds additional downward pressure to the market, complicating the short-term price recovery.
In this scenario, using network difficulty as a metric for structural cost reveals an industry under persistent stress. Until the price of Bitcoin converges again toward production costs, the sector will remain in a phase of purging and consolidation.
In summary, the network’s resilience will depend on the ability of large miners to refinance debt and reduce energy costs. Meanwhile, the market cautiously observes this capitulation cycle, which generally precedes the end of negative macroeconomic trends.
