Bitcoin miners face deepening margin squeeze as revenue falls below production costs

Bitcoin miner revenue has ground lower for most of the past year, with the 7-day moving average now sitting near $30 million per day, down from the $50 million-plus levels seen last summer. Transaction fees have nearly vanished from the mix, contributing under $250,000 to that total, making them a rounding error compared to the block subsidy. 

BTC has traded near $62,500 against JPMorgan's roughly $78,000 production cost estimate, a gap that has held for five straight months, the longest stretch this cycle. That's notable because production costs have historically served as a soft price floor.

An estimated 20% of miners are now unprofitable at current prices, and that stress is showing up at the network level. The beta of mining difficulty to bitcoin's price has climbed to 0.62 over the past six months, as higher-cost operators increasingly power machines on and off with price rather than mining through losses.

Difficulty fell 10% in the second week of June, the second drawdown of that size this year after a similar move in the first quarter, both arriving during extended stretches of sub-cost pricing.

Public miners have leaned on balance sheets rather than cut deeper, selling more than 32,000 BTC in the first quarter to cover operating costs.

With the next halving still nearly two years away, the subsidy curve only moves in one direction. Fee revenue is the one variable miners can still influence, and its persistence near multi-year lows leaves margin recovery dependent almost entirely on price.

This is an excerpt from The Block's Data & Insights newsletter. Dig into the numbers making up the industry's most thought-provoking trends.