Bitcoin falls below "this price" causing mining industry to potentially collapse! Mining cost threshold triggers a selling wave

Bitcoin prices are approaching the critical $70,000 level, which marks the life-and-death boundary for global mining operations. The shutdown price range for mainstream Antminer S21 series machines is concentrated between $69,000 and $74,000. Falling below this line will force miners to shut down or sell off reserves. Coupled with current global liquidity tightening, ETF capital outflows, and derivatives liquidation pressures, this could trigger a wave of forced selling, leading to disorderly market declines.

Why the Mining Cost Line Is Locked at $70,000

(Source: Antpool)

Bitcoin mining is a highly capital-intensive and price-sensitive industry. Miners’ operating costs mainly include electricity, equipment depreciation, facility rent, and labor expenses, with electricity costs typically accounting for 60% to 80% of total costs. When Bitcoin prices are above total mining costs, miners can operate sustainably and accumulate profits. But once prices fall below the cost line, each mined Bitcoin results in actual losses.

Currently, the mainstream mining equipment in the market, Antminer S21 series, accounts for a significant share of global Bitcoin hash rate. This model has an energy efficiency of about 17.5 watts per terahash. At the current network difficulty of approximately 110 trillion and an average electricity price of $0.08 per kWh, its breakeven point falls within the $69,000 to $74,000 range. This means that when Bitcoin prices are above $70,000, S21 miners can still maintain positive cash flow. But once it drops below this level, mining becomes unprofitable.

It’s worth noting that $0.08 per kWh is only the global average. In regions with higher electricity costs, such as Europe and some Asian countries, the shutdown price for miners could be higher, reaching $80,000 or even $90,000. Conversely, in areas rich in hydro or wind power, like Texas, Kazakhstan, or Norway, electricity prices may be as low as $0.03 to $0.05 per kWh, allowing miners in these regions to remain profitable even when Bitcoin is at $50,000. This regional difference means that when prices fall, the first to shut down will be miners in high-cost areas, while low-cost miners will gain larger market share.

Another key variable in Bitcoin mining economics is the network difficulty adjustment mechanism. The Bitcoin protocol automatically adjusts mining difficulty every 2,016 blocks (roughly two weeks) to maintain an average block time of 10 minutes. When many miners shut down due to price drops, total network hash rate decreases, and the next difficulty adjustment cycle will lower difficulty, making it easier for remaining miners to mine Bitcoin. This self-regulating mechanism is theoretically capable of stabilizing the mining industry, but the key is that difficulty adjustment takes time, while price declines can be very rapid. The period before difficulty adjusts is the most vulnerable phase for miners.

Triple Chain Reaction Triggered by Falling Below Cost Line

When Bitcoin prices stay below $70,000, the mining industry will face escalating pressures in three stages. The first stage is a cash flow crisis, where miners find that daily mining revenue can no longer cover electricity and hosting costs. Large mining companies with healthy balance sheets may choose to draw on reserves to continue operations, betting that prices will rebound after difficulty adjustments. But small and medium miners often lack this buffer and must make decisions within days.

The second stage is selling pressure. To maintain cash flow and avoid larger losses, miners begin selling their Bitcoin reserves. Historical data shows that miners typically hold their mined Bitcoin for months or years as strategic reserves, which become lifelines during bear markets. However, when the entire industry faces cost pressures simultaneously, large-scale selling by miners will flood the market, further depressing prices. This type of selling differs from retail panic selling; it is driven by operational needs, even if miners are optimistic about long-term prospects and have to liquidate in the short term.

Two Main Modes of Miner Selling

Emergency Selling: Directly selling Bitcoin on the spot market for fiat currency to pay electricity bills, usually accepting market prices, which exacerbates downward pressure.

OTC (Over-the-Counter) Trading: Selling large amounts of Bitcoin at discounts to institutional buyers. While this doesn’t directly impact market prices, it increases potential selling pressure.

The third stage is a shutdown wave. When reserves are still insufficient to cover losses, miners are forced to turn off their machines. This shutdown isn’t just temporary; for leveraged equipment buyers, it can mean default and bankruptcy. During the 2022 bear market, many US-listed mining companies filed for bankruptcy due to inability to repay equipment loans, with their Bitcoin holdings and mining rigs auctioned off, further fueling market panic.

The scale of the shutdown wave depends on how long Bitcoin remains below the cost line. If prices only briefly dip below $70,000 and quickly rebound, most miners will choose to absorb losses temporarily. But if prices stay below that level for weeks, hash rate will decline significantly, and network security could be affected—though Bitcoin’s difficulty adjustment mechanism will eventually restore balance.

Current Macro Environment Amplifies Mining Fragility

The risks in the Bitcoin mining pressure zone are not isolated but are compounded by the current macroeconomic environment. The market is already facing global liquidity tightening, reduced risk appetite, ETF capital outflows, and derivatives liquidation pressures. Under this backdrop, mining stress could be the last straw that breaks the camel’s back.

Global liquidity tightening stems from shifts in major central banks’ monetary policies. While the Federal Reserve has paused rate hikes, it maintains high interest rates, increasing capital costs and putting risk assets under pressure. As a high-volatility asset, Bitcoin is often among the first to be sold off in liquidity crunches. Meanwhile, US spot Bitcoin ETFs, after initial capital inflows, have recently experienced continuous net outflows, indicating institutional investors are reducing their Bitcoin holdings.

Leverage liquidations in derivatives markets further amplify price volatility. When Bitcoin prices fall, highly leveraged long contracts are forcibly liquidated, creating chain selling pressure. This technical selling, combined with cost-based selling by miners, forms a double blow. Historically, Bitcoin’s sharpest declines have occurred during periods of multiple pressures, such as the chain liquidation triggered by the Luna collapse in June 2022, when Bitcoin dropped from $30,000 to $18,000 within days.

The interaction between mining pressure and market liquidity creates a negative feedback loop. Miner selling depresses prices, which triggers more shutdowns and selling, while market panic reduces liquidity further, making prices even more sensitive to selling pressure. In such scenarios, Bitcoin can experience disorderly declines, with prices falling much faster than fundamental factors would suggest.

Shutdown Price Is Not the Same as the Bottom of the Price

It’s important to clarify that the shutdown price for miners is not the same as Bitcoin’s price floor. This is a common misconception among investors. Miners cannot control Bitcoin’s market price, which can remain below the breakeven point for extended periods. During the 2015 and 2018 bear markets, Bitcoin prices stayed well below the average mining cost at the time, causing many miners to exit the market, but prices did not immediately rebound.

However, the shutdown price marks a behavioral threshold, and behavior is a key driver during pressure periods. When prices approach or fall below the shutdown point, miners shift from “holders” to “sellers,” and from “expanding” to “contracting.” This collective behavioral shift is crucial to understanding why the mining pressure zone around $70,000 matters.

Historically, miner selling pressure will eventually ease due to two mechanisms: difficulty adjustment lowering the costs for remaining miners, and price declines attracting new buyers. But during this transition, market volatility tends to spike sharply, with short-term swings potentially very violent. For investors, understanding that $70,000 is not a price bottom but a critical point in the entire mining ecosystem helps better assess current market risks.