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Bitcoin is now approximately 20% below its estimated average production cost, increasing financial pressure across the BTC mining sector.
The average cost to mine one bitcoin is around $87,000, according to data from Checkonchain, while the spot price has fallen towards $70,000. Historically, trading below production cost has been a feature of a bear market.
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The production 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 an estimate of average mining costs.
In previous bear markets, including 2019 and 2022, bitcoin traded below production cost before gradually converging back toward it.
Hashrate, which measures the total computational power securing the bitcoin network, peaked near 1.1 zettahash (ZH/s) in October, subsequently declining by roughly 20% as less efficient miners were forced offline. More recently, hash rate has rebounded to 913 EH/s, suggesting some stabilization.
However, many miners remain unprofitable at current prices. With revenues below operating costs, miners are continuing to sell bitcoin holdings to fund day-to-day operations, cover energy expenses, and service debt. This ongoing miner capitulation highlights persistent stress in the sector.