Compass Investments

– Important points: Bitcoin’s current quote of $70000 is about 20% behind the average production price of $87,000, which is typical during periods of market downturn.

In past bear cycles, including 2019 and 2022, Bitcoin has traded below the cost of production before gradually returning to that level.

the hash rate has recovered after falling 20% from its peak of around 1.1 ZH/s in October.

At the moment, its average production price is 20% lower than expected, adding to the financial difficulties in BTC mining.

The average cost to produce a single bitcoin is approximately $87,000, according to Checkonchain, while the market value has dropped to $70000. Historically, trading below cost has been the hallmark of a prolonged downturn.

Stay tuned for more news.

The cost calculation uses network complexity as a proxy for the overall cost structure of the sector. By comparing complexity to Bitcoin’s market capitalization, the model estimates the average cost of mining.

Hashrate, which reflects the total computing power supporting the Bitcoin network, peaked at 1.1 zettahash (ZH/s) in October before declining by about 20% due to the shutdown of less profitable mining rigs. The hashrate recently resumed growth to 913 EH/s, suggesting some stabilization.