Bitcoin has traded below average mining production costs for five consecutive months, pushing the mining industry into its worst profitability crisis since the 2022 bear market.
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Bitcoin miners face 5 months of sub-cost trading as revenue drops 26%
Bitcoin has traded below average mining production costs for five consecutive months, pushing May miner revenue down 26% year-over-year to about $1.12 billion.
"The combination of slowly bleeding balances and revenue stuck in the lower third of its recent range underlines why miners are leaning on BTC sales and AI/HPC diversification to support cash flow," Matthew Sigel, head of digital assets research at VanEck, said in the firm's mid-June ChainCheck report.
BTC's 30-day moving average price slipped to about $70,321, down 10.3% month-over-month, as US spot exchange-traded products shed a cumulative $5 billion, with 19 of the last 22 sessions in net outflow, according to VanEck. Realized losses jumped 78% month-over-month to $714 million while realized profit collapsed 57% to $194 million, pushing the realized profit/loss ratio below 1.0 to 0.27 — a level that has historically coincided with capitulation rather than profit-taking. Aggregate onchain miner balances have ground lower to about 1.78 million BTC, near the 37th percentile of their since-2023 range. Daily miner revenue sits at only the 17th percentile of the last 12 months, VanEck data shows.
The sustained sub-cost trading environment risks triggering a wave of miner capitulation, where operators are forced to sell BTC reserves or shut down entirely, reducing network hashrate and potentially creating additional downward selling pressure. Marathon Digital bought 1,000 BTC worth $66 million on June 16 after selling 20,880 BTC in the first quarter at an average price of $70,100, according to VanEck, while operators including IREN and TeraWulf are pivoting to AI and high-performance computing to support cash flow. IREN signed a $1.6 billion purchase agreement with Dell for Blackwell systems to service its $3.4 billion managed AI cloud contract, with commissioning targeted for early 2027.
Options Market Turns Defensive as Put Premiums Surge
The options complex flipped sharply defensive over the past 30 days. Put premiums paid surged 46% month-over-month to $441.3 million while call premiums fell 34% to $321.3 million, swinging the call/put premium ratio from 1.61 to 0.73 — the 10th percentile all-time, according to Glassnode data cited by VanEck. On Deribit, traders loaded up on short-dated put options spanning expirations from June 22 to July 31, including 540 contracts of July 10 $55,000 puts and 314 contracts of July 31 $52,000 puts, Laevitas data shows. Total open interest eased 3.4% month-over-month to $34.2 billion, still at the 84th percentile historically.
Strategy's Preferred Stock Rout Adds to Market Pressure
Strategy, the largest publicly listed Bitcoin holder, faces mounting complications as its preferred stock STRC plunged to record lows well below its $100 par value. "Either sell an enormous amount of BTC and MSTR to help bring STRC back near par, and at least buy yourself some time, or continue to watch every part of your cap structure melt because of the uncertainty you've created," Jeff Dorman, chief investment officer at Arca, said on X.
BTC changed hands near $62,400 as of writing, down 0.8% since midnight UTC, after hitting highs near $67,000 early this week, according to CoinDesk data. The share of supply in profit slid from 64% to 54%, far under its roughly 81% four-year average, while supply held in loss is near a four-year high at the 95th percentile, VanEck data shows.
This article is for informational purposes only and does not constitute investment advice.
