Bitcoin Below Mining Cost: What Should Investors Do?

13 Feb 2026 11:13 AM By Stormrake

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In order to produce Bitcoin, it must be mined through the Proof of Work mechanism embedded in the protocol. When I say produce, I do not mean creating more than the fixed 21 million supply. I am referring to the block rewards that miners earn for validating transactions and securing blocks that keep the Bitcoin network running. These rewards consist of newly issued Bitcoin, known as the block subsidy, alongside transaction fees paid by users.

Currently, the circulating supply stands at just under 20 million BTC, leaving a little over 1 million coins still to be mined. However, due to the halving cycle and the gradual reduction in block rewards every four years, the final Bitcoin is not projected to be mined until around 2140.

I will not dive into the technical complexities of mining today. Instead, this Morning Note focuses on a simple yet powerful metric used to gauge market conditions: the cost of production. More specifically, whether miners are operating at a profit or a loss.

According to on-chain data from MacroMicro, the estimated cost to mine one Bitcoin is approximately $84k, while Bitcoin is currently trading at $66k. That creates a clear discrepancy, with miners operating under pressure. Other estimates point to a similar range. A recent JPMorgan report places production costs closer to $77k, while CheckonChain estimates around $87k. Although the exact figures vary depending on methodology, energy assumptions, and hardware efficiency, they consistently suggest that the average cost to produce one Bitcoin currently sits in the $80k region.

Historically, when Bitcoin trades below its cost of production, it places significant strain on miners. Operating at a loss forces some miners to sell reserves in order to cover energy, infrastructure, and operational expenses. This can introduce additional sell pressure in the short term. But it also creates opportunity.

These periods are rare and typically occur during bear markets. They also tend to be relatively short lived, often lasting less than six months. We saw this dynamic play out in both 2018 and 2022.

In 2018, mining costs were estimated between $4k and $6k depending on hardware efficiency, while Bitcoin bottomed around $3.2k. In 2022, production costs were estimated between $20k and $25k, while price reached a low of $15.6k. In both cases, price traded materially below production costs before eventually recovering and entering a new expansion phase.

At present, Bitcoin is trading roughly 20% below estimated mining costs, aligning with the upper end of previous bear market divergences. That does not mean price cannot move lower. In prior cycles, Bitcoin has dipped more than 20% below production cost. However, historically, price has not remained below this level for extended periods. The clock has now started ticking. With miners operating at a loss, the historical six month compression phase is underway, and if past cycles are any guide, price does not remain below production cost for long.

When Bitcoin trades well below its cost of production, it has historically marked some of the most attractive accumulation phases of the cycle. Price does not typically stay beneath production cost for long before supply tightens, weaker operators capitulate, and the market gradually stabilises.

These moments have often proven to be generational opportunities. When even miners are under pressure, long term participants are presented with asymmetric risk reward. While short term volatility may persist, history suggests that buying when production costs exceed market price has rewarded patient capital.

Bitcoin does not stay discounted forever.

Stormrake Spotlight: Pax Gold (PAXG) ($4,917)

PAXG has slipped over 3% over the last 24 hours, mirroring broader weakness across global markets. Price remains stuck between the two key zones we have previously identified, leaving the asset in a neutral technical position for now.

However, repeated failed attempts at reclaiming the all time high are not a positive signal for the bulls. For now, patience is required as PAXG consolidates within range.

BTC/USD Key Levels and Price Action:

As anticipated, bears managed to push Bitcoin below the key support line, with price now struggling to hold above $66k. Sellers remain in control.

If weakness persists, the next major level to watch sits around $60k, which marked last week’s low. A revisit of that region would confirm continued downside pressure and open the door for further volatility.

BTC Total ETF Flows for 12 Feb: (data not available at the time of writing)

(ETF flow data is sourced from https://farside.co.uk/btc/ and reflects figures at the time of writing.)

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*All prices are denominated in USD unless stated otherwise*

Written by Alexandar Artis and James Ryan

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Bitcoin Below Mining Cost: What Should Investors Do?

Stormrake Spotlight: Pax Gold (PAXG) ($4,917)

BTC/USD Key Levels and Price Action:

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