Historical Crisis in Bitcoin Mining: Production Cost Exceeds $78,000, Losses Continue for 5 Months

Bitcoin miners are facing the most significant profit margin pressure in recent times as production costs rise above market prices.

In the cryptocurrency market, the gap between the Bitcoin (BTC) price and production costs continues to widen against miners. Miner revenues, which have shown a downward trend for most of the past year, have dropped to levels around $30 million daily. These figures, which hovered above $50 million last summer, reveal how much the financial pressure in the sector has deepened.

Specifically, the fact that the share of transaction fees in total revenue on the network has fallen below $250,000 has made miners almost entirely dependent on block rewards. According to data shared by JPMorgan, the cost of producing one Bitcoin is estimated at approximately $78,000. However, the Bitcoin price has been hovering around the $62,500 level, remaining below this cost for five months. This situation has been recorded as one of the longest periods of loss in mining history.

Mining Difficulty and Hardware Efficiency

Under current market conditions, it is estimated that approximately 20 percent of miners are unable to turn a profit. This economic stress is also reflected in the general operation of the network. As high-cost operations chose to turn off their devices rather than incur losses, mining difficulty fell by 10 percent in the second week of June. This decline indicates that miners have turned to a strategy of turning machines on and off based on market prices.

Publicly traded mining companies have resorted to liquidating their holdings to cover operational expenses. Having sold more than 32,000 Bitcoin (BTC) in the first quarter of the year, these companies are trying to protect their balance sheets. With the next halving event still two years away, recovery of miners’ profit margins seems entirely dependent on price increases or a resurgence in transaction fees.