Bitcoin Miners Face Squeeze as $70K Price Falls Short of $87K Production Cost

$87,000 to mine one bitcoin. $70,000 current market price. The math is brutal for miners right now.

Bitcoin is trading approximately 20% below its estimated average production cost, creating what Checkonchain data suggests is a historically familiar pattern—one typically seen during bear markets. In 2019 and 2022, bitcoin traded below production cost before gradually converging back toward it.

The Hashrate Rollercoaster

The bitcoin network's total computational power peaked near 1.1 zettahash (ZH/s) in October before plummeting roughly 20% as less efficient miners were forced offline. It's a classic case of economic Darwinism in action—only the fittest miners survive when margins turn negative.

Recent data shows hashrate has rebounded to 913 EH/s, suggesting some stabilization. But this recovery masks the underlying pain many miners continue to experience.

The Capitulation Continues

With revenues below operating costs, miners are caught in a vicious cycle. They're selling bitcoin holdings to fund day-to-day operations, cover energy expenses, and service debt. This ongoing "miner capitulation" creates additional selling pressure on bitcoin's price, potentially extending the period of unprofitability.

The production cost estimate uses network difficulty as a proxy for the industry's all-in cost structure. By linking difficulty to bitcoin's market capitalization, the model provides insight into average mining costs across the sector.

Winners and Losers

This environment creates clear winners and losers. Large-scale operations with access to cheap energy and efficient hardware can weather the storm, potentially gaining market share as smaller competitors exit. Meanwhile, publicly traded miners face additional pressure from shareholders and debt obligations.

For institutional investors, this presents a complex picture. Mining stocks often trade at significant discounts during these periods, but the risk of further deterioration remains high. The sector's consolidation could benefit survivors long-term, but timing the bottom remains challenging.