Bitcoin Currently approximately 20% below estimated average production costs, which increases financial pressure on the entire BTC mining industry.
According to Checkonchain, the average cost to mine one Bitcoin is about $87,000, while spot prices have fallen to $70,000. Historically, trading below production costs has been a feature of bear markets.
Production estimates use network difficulty as a proxy for the industry’s overall cost structure. By linking difficulty to Bitcoin’s market capitalization, the model provides an estimate of the average mining cost.
In previous bear markets, including 2019 and 2022, Bitcoin has traded below the cost of production before gradually falling back to the cost of production.
Hashrate, a measure of the total computing power that secures the Bitcoin network, peaked at nearly 1.1 zettahash (ZH/s) in October before falling by about 20% as less efficient miners were forced offline. Recently, the computing power has rebounded to 913 EH/s, indicating some stabilization.
However, at current prices, many miners are still unprofitable. With revenue falling below operating costs, miners continue to sell Bitcoin to fund daily operations, pay energy bills and pay down debt. The continued capitulation by miners highlights the ongoing pressure on the industry.
