Bitcoin Trades 20% Below Production Cost as Miner Profitability Drops to 14-Month Low

Bitcoin has slipped to roughly $70,000 on February 5 — about 20% below the estimated $87,000 cost to produce a single coin — as hashrate declines, shrinking margins, and a broader market rout drag miner profitability to its lowest point in 14 months.

Key Takeaways:

– Bitcoin is trading near $71,000, roughly 20% below its estimated all-in production cost — a gap that has historically only appeared during bear markets.

– The Miner Profit and Loss Sustainability Index has sunk to 21, a level not seen since November 2024, after daily mining revenue briefly touched $28 million.

– A difficulty adjustment expected on February 8 could cut mining difficulty by around 14%, throwing a lifeline to operators still running machines.

CryptoQuant data puts the network hashrate near 970 exahashes per second, down 12% from a peak of roughly 1.1 zettahashes per second in October — the steepest slide since China’s 2021 mining ban.

The downturn traces back to early October, when Bitcoin was trading near $126,000. The largest derivatives liquidation event on record kicked off a sell-off that has yet to find a floor. CryptoQuant’s Bull Score Index has since fallen to zero.

Miner Revenue Collapses as Block Times Drift Above Target

The financial strain on miners has intensified sharply in recent weeks. Daily Bitcoin mining revenue plunged from roughly $45 million to a yearly low of $28 million in late January, driven by a combination of falling prices and severe US winter storms that forced large operators to curtail production.

Output from the largest publicly traded miners dropped from roughly 77 Bitcoin per day to just 28 over the same period, according to CryptoQuant.

Average block times have drifted to roughly 11.6 minutes, well above the protocol’s 10-minute target, reflecting the volume of hashpower that has gone offline.

The Miner Profit and Loss Sustainability Index has slid to 21, confirming that revenues are failing to cover costs for a significant portion of the network. Older models, including the Antminer S19 XP+ and MicroBT M60S, are no longer profitable at current difficulty and standard electricity rates of $0.08 per kilowatt-hour.

Even newer S21-series machines are approaching their shutdown price range of $69,000 to $74,000, as previously reported.

Difficulty Adjustment Expected to Deliver Sharpest Cut Since 2021

The next Bitcoin difficulty retarget, projected for February 8, is estimated to cut mining difficulty by approximately 14% to around 121 trillion, down from the current 141.67 trillion.

If confirmed, it would mark the largest single negative adjustment since mid-2021 and would immediately improve revenue per unit of computing power for miners that remain online.

VanEck, the digital assets investment firm, has argued that sustained hashrate declines have historically functioned as contrarian indicators. The firm’s data shows that negative 90-day hashrate growth has been followed by positive 180-day Bitcoin returns 77% of the time, with an average gain of 72%.

“When hash rate compression persists over longer periods, positive forward returns tend to occur more often and with greater magnitude,” VanEck analysts Matt Sigel and Patrick Bush wrote in a December research note.

AI Pivot and Institutional Retreat Add Layers of Uncertainty

Part of the hashrate decline may be structural rather than cyclical. As covered earlier this year, miners including IREN and Core Scientific, have been redirecting capacity toward artificial intelligence and high-performance computing workloads, which offer steadier returns than block rewards in the current margin environment.

VanEck estimated that as much as 10% of Bitcoin’s hashrate could eventually shift toward AI permanently.

Meanwhile, institutional demand through US spot Bitcoin ETFs has reversed. Research data shows ETFs have become net sellers in early 2026, offloading roughly 10,600 BTC year-to-date compared with purchases of about 46,000 BTC over the same period in 2025.