JPMorgan Warns 20% of Bitcoin Miners Are Unprofitable as BTC Trades Below Production Cost

Hashrate and difficulty decline

As unprofitable high-cost miners have shut down, the Bitcoin network hashrate and mining difficulty have declined noticeably . Mining difficulty fell roughly 10% in the second week of June alone . By February 2026, cumulative difficulty had already dropped approximately 15% year-to-date — the largest decline since China's 2021 mining ban . The network hashrate retreated roughly 20% from its October 2025 peak of 1.1 zettahash to around 913-920 EH/s by early May 2026 .

The correlation between BTC price, hashrate, and difficulty has strengthened significantly. Over the past six months, the beta of mining difficulty to bitcoin prices rose to 0.62, suggesting that a larger share of miners are now price-sensitive and that the network adjusts more rapidly to price changes .

Record miner sell-off in Q1 2026

In response to the cash crunch, publicly traded miners sold over 32,000 BTC in Q1 2026 — exceeding their combined sales for all of 2025 — to fund operating expenses . This was the largest quarterly liquidation on record, surpassing even the sell-off during the 2022 Terra-Luna collapse . Major mining firms including MARA Holdings, CleanSpark, Riot Platforms, Cango, Core Scientific, and Bitdeer all contributed to the selling pressure . Riot Platforms alone sold 3,778 BTC for $289.5 million in Q1 at an average price of $76,626 per bitcoin .

Mining profitability at post-halving lows

CoinShares, whose data JPMorgan cites, reported that hashprice — the daily revenue per unit of hashing power — hit approximately $36–38/PH/s/day in Q4 2025, then fell further to ~$29/PH/s/day in Q1 2026, near or below breakeven for many operators and well below pre-halving levels . The weighted average cash cost to produce one Bitcoin among publicly listed miners reached approximately $79,995 in Q4 2025, meaning many miners were producing BTC at a loss . Three consecutive negative difficulty adjustments in late 2025, the first such streak since July 2022, signaled miner capitulation .

Difficulty adjustment outlook and the "soft floor" breaking

JPMorgan expects hashrate to eventually rebound as difficulty adjusts lower, which could push mining difficulty back up in the next adjustment period, but the bank warns this creates a cycle: higher difficulty would raise production costs again, pressuring marginal miners . The report frames the production cost as a "soft floor" for Bitcoin's price — but one that keeps breaking as miners capitulate and sell their reserves into the market .

Some high-cost operators are already repurposing their mining capacity toward AI and high-performance computing workloads, a shift that eases near-term mining economics and allows more efficient operators to capture market share .

Miner solvency outlook

As long as Bitcoin trades below its production cost, JPMorgan sees ongoing stress. If BTC fails to rebound above $100,000 in 2026, high-cost miners face accelerated exits and potential insolvency . Operators with very low energy costs or those that have successfully pivoted to AI workloads may survive and potentially dominate future capital markets .