bitcoin It is now approximately 20% below its estimated average production cost, increasing financial pressure on the entire BTC mining sector.
The average cost of mining a bitcoin is about $87,000, according to data from Checkonchain, while the spot price has fallen towards $70,000. Historically, trading below the cost of production has been a characteristic of a bear market.
Production estimation uses network difficulty as an indicator of the industry’s total cost structure. By linking difficulty to bitcoin market capitalization, 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 towards it.
Hashrate, which measures the total computing power protecting the bitcoin network, peaked near 1.1 zettahash (ZH/s) in October, and subsequently declined by about 20% as less efficient miners were forced offline. More recently, the hash rate has recovered to 913 EH/s, suggesting some stabilization.
However, many miners remain unprofitable at current prices. With revenues below operating costs, miners continue to sell bitcoin holdings to fund daily operations, cover energy expenses, and pay down debt. This ongoing mining capitulation highlights the persistent tension in the sector.
