Bearish Bitcoin Mining Data Could Signal a Spot-Driven BTC Rally

Bearish Bitcoin mining data may be counter signal that encourages spot-driven BTC rally

As of November 26, Bitcoin experienced a sharp increase, reaching $91,950 as the market is at a crucial turning point. New data from Capriole Investments shows that Bitcoin's production cost is approximately $83,873, while the base electrical cost for mining is substantially lower at $67,099.

Key Takeaways:

Bitcoin is trading just above the production cost for miners as profitability declines.
The high hashrate and falling hash prices are causing stress for miners.
The dynamic NVT ratio dropped below its historical low band, which typically indicates bullish sentiment, but often follows a final shakeout.

Bitcoin Mining Margins Shrink Amid Profitability Challenges

Currently, Bitcoin miners are facing a production price of $87,979, which leaves them with only a slim margin of 4.9%—one of the narrowest this cycle. Historically, when margins are thin, it can stabilize the market rather than indicate distress. As profitability tightens, less efficient miners tend to exit the market, leading to a decrease in mining difficulty, which in turn reduces selling pressure from miners.

This situation often creates what is known as “quiet support,” a scenario where Bitcoin stabilizes during transitions from fear-driven sell-offs to longer-term accumulation.

Cryptocurrencies, Bitcoin Price, Bitcoin Mining, Markets, Cryptocurrency Exchange, Binance, Price Analysis, Market Analysis, Hashrate Bitcoin miner price, production cost, and electrical cost data. Source: Capriole Investments

Recent analysis shows that miner profitability is being squeezed due to increased competition within the network. In October, Bitcoin’s hashrate surged to a record 1.16 ZH/s, even as BTC's price dipped toward $81,000 in early November.

Moreover, hash prices, which represent the revenue miners earn per computing power unit, fell below $35 per hash on November 25, significantly under the median of $45/PH/s earned by publicly traded miners. Now, the payback periods for mining equipment have extended beyond 1,200 days, with elevated financing costs and growing borrowing pressures adding to the strain.

Cointelegraph has reported that while many mining operations are shifting toward AI and high-performance computing, revenue from these sectors is still too minimal to compensate for the substantial drop in Bitcoin mining profits.

Hence, the current shrinking margins of miners is significant. When miner stress intensifies at the same time as spot prices approach production costs, the market often enters a resetting phase, allowing weaker miners to exit, mining difficulty to decrease, and overall selling pressure to ease.

Related: Bitcoin price bottom expected ‘this week’ as BTC experiences a 20% drop in November

Bitcoin's Dynamic NVT Indicator Signals Potential Upswing

In addition to miner profitability, Bitcoin’s Dynamic Range Network Value to Transaction (NVT) ratio has recently dipped below its historical NVT Low of 194, falling into what could be termed the “value zone” for the network. A low NVT ratio indicates that Bitcoin’s market capital is trailing behind the strength of its blockchain transactions, a pattern typically seen late in market corrections rather than early.

Historically, this has been a positive sign. When the Dynamic NVT enters this lower band, it suggests that the market is undervaluing the underlying network activity, often paving the way for a broader market reversal once sentiment shifts toward bullishness.

Cryptocurrencies, Bitcoin Price, Bitcoin Mining, Markets, Cryptocurrency Exchange, Binance, Price Analysis, Market Analysis, Hashrate Bitcoin’s price and dynamic range NVT analysis. Source: Capriole Investments

However, this indicator has a caveat; it seldom marks the absolute low point. Traditionally, Bitcoin has first established an initial low after the NVT ratio fell below the low mark, then rebounded, before revisiting that range again before a subsequent rise.

If this historical pattern holds, Bitcoin may trend down below $80,000 one more time. Nonetheless, the mix of heightened miner margins and the NVT value-zone signal suggests that Bitcoin is likely deeper into a phase of market recovery rather than simply in the midst of a prolonged downturn.

Related: Bitcoin aims for a rebound to $96K from its current 'discount' zone: Analysis