Bitcoin's Price Plummets 20% Below Production Cost as Miner Profitability Reaches 14-Month Low
Bitcoin's price has dropped to approximately $70,000 on February 5, a staggering 20% below the estimated $87,000 cost to produce a single coin. This decline coincides with a 12% decrease in network hashrate, shrinking profit margins, and a broader market downturn, pushing miner profitability to its lowest point in 14 months.
Key Insights:
- Bitcoin's price is trading near $71,000, a 20% discount from its estimated all-in production cost, a gap typically seen during bear markets.
- The Miner Profit and Loss Sustainability Index has plummeted to 21, its lowest since November 2024, after daily mining revenue briefly dipped to $28 million.
- An upcoming difficulty adjustment on February 8 could slash mining difficulty by 14%, offering a lifeline to struggling miners.
The network's hashrate is now around 970 exahashes per second, down 12% from its peak of 1.1 zettahashes per second in October, marking the steepest decline since China's 2021 mining ban.
The downturn began in early October when Bitcoin traded near $126,000. A record-breaking derivatives liquidation event triggered a sell-off that persists. CryptoQuant's Bull Score Index has since plummeted to zero.
Miner Revenue Collapses as Block Times Drift Above Target
Financial pressure on miners has intensified. Daily Bitcoin mining revenue dropped from $45 million to a yearly low of $28 million in late January, due to falling prices and severe US winter storms disrupting production.
Output from major publicly traded miners declined from 77 Bitcoin per day to just 28 during the same period, according to CryptoQuant. Average block times are significantly above the protocol's 10-minute target, indicating a substantial reduction in hashpower.
The Miner Profit and Loss Sustainability Index has fallen to 21, confirming that revenues are insufficient to cover costs for a significant portion of the network. Older models like the Antminer S19 XP+ and MicroBT M60S are no longer profitable at current difficulty and electricity rates.
Even newer S21-series machines are approaching their shutdown price range of $69,000 to $74,000.
Difficulty Adjustment Expected to Deliver Sharpest Cut Since 2021
The next Bitcoin difficulty retarget on February 8 is projected to cut mining difficulty by approximately 14% to 121 trillion, down from the current 141.67 trillion.
This adjustment would mark the largest single negative change since mid-2021 and would immediately boost revenue per unit of computing power for remaining miners.
VanEck, a digital assets investment firm, suggests that sustained hashrate declines have historically been contrarian indicators. Their 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.
AI Pivot and Institutional Retreat Add Layers of Uncertainty
Part of the hashrate decline may be structural rather than cyclical. Miners like IREN and Core Scientific are redirecting capacity toward artificial intelligence and high-performance computing, offering steadier returns than block rewards in the current margin environment.
VanEck estimates that up to 10% of Bitcoin's hashrate could shift permanently toward AI.
Meanwhile, institutional demand through US spot Bitcoin ETFs has reversed. Research data indicates that ETFs have become net sellers in early 2026, offloading approximately 10,600 BTC year-to-date, compared to purchases of about 46,000 BTC over the same period in 2025.
