Bitcoin is an a bear market. This much cannot be disputed.
Jim Ferraioli Director, Digital Currencies Research and Strategy Charles Schwab. argued The Wednesday report on Bloomberg was more specific and structural. This selloff is based not on sentiments or charts, but rather the physics behind energy consumption.
In context, the figures frame Bitcoin’s decline. Bitcoin peaked at $126,000 in the fall before collapsing to roughly $60,000 in February — a 50% correction that, while brutal for recent buyers, falls far short of the 75%-plus implosions that defined prior Bitcoin bear markets.
Ferraioli’s analytical framework revolves around one central question: How much does Bitcoin cost to produce? Answering this question creates an underlying gravitational level that has been stable over multiple cycles.
For the most efficient miners — those operating at scale with next-generation ASIC hardware and access to the cheapest wholesale energy — the cost to produce one Bitcoin sits at approximately $60,000, Ferraioli said.
This figure isn’t random. The cost to power a facility is $0.07 per Kilowatt-hour, using the latest semiconductor fleets.
The less efficient miners — those with older ASIC hardware, higher energy costs, and thinner operational margins — carry a production cost of approximately $95,000 per BTC, according to Glassnode data cited in Schwab’s May 2026 research report. Bitcoin’s value is currently between $60,000 to $95,000.
Bitcoin energy floor: $60,000 could be the lowest point
Ferraioli says that, historically, when markets are in deep recessions the price of mining for the top miners is the benchmark. BTC’s 200-week moving mean and February’s lowest level near $60,000 are almost identical.
BTC’s selling pressure does not happen at random. Demographically, it is specific. The investors driving forced liquidations are those who acquired Bitcoin during the past 18 months — buyers who rode the asset from sub-$80,000 up to $126,000 and then watched gains evaporate in full.
Schwab tracks two cost-basis metrics to quantify this pressure: the average acquisition cost for U.S. spot ETF and ETP holders, which stands near $83,000, and the active investor cost basis — excluding coins rewarded to miners — which sits near $78,000.
The two figures are well above the current spot price, which puts most recent participants in unrealized losses. This reinforces $83,000’s role as an overhead ceiling rather than support floor.
Glassnode’s on-chain data This dynamic is corroborated. Bitcoin’s last attempted rally stopped at an aggregate ETF cost base near $83,000. The total realized loss soared to over $1.35 billion a day. Long-term holders also capitulated from the cycle-top position. Hedge funds represent roughly 30% of spot ETP ownership but are operating market-neutral, executing basis trades rather than taking directional views — meaning they provide no natural bid when prices fall.
Ferraioli’s analytical approach becomes more constructive. All major Bitcoin miners have announced that they will be shifting their focus to high-performance computing for AI workloads. It would seem that the economics favor abandoning Bitcoin Mining: during high demand periods, inference generates a higher net revenue for each megawatt-hour.
The demand for AI-based inferences isn’t constant throughout the day. Models are heavily loaded during working hours, but they sit idle at night and weekends.
That creates a structural opportunity that does not displace BTC mining — it layers on top of it. Schwab’s analysis models Bitcoin as an optimal baseload for monetizing power at off-peak business hours. Inference is then added during peak demand.
This hybrid data center model allows for maximum utilization of the capacity throughout the entire 24-hour period, rather than simply leaving it dark as inference demand drops. This means more stable revenues, fewer forced BTC purchases to cover costs and a lower risk of structural failure during bear markets.
The energy that Bitcoin relies on is what backs it up
Energy economics is the underlying theory. Bitcoin has no earningsThere is no cash flow and there’s no guidance from the CEO. Its value, in Ferraioli’s framework, derives from the energy cost required to produce it — a cost that is transparent, verifiable, and historically durable.
Prices cannot trade lower than the costs of production on commodity markets. As producers shut down and supply contracts are signed, equilibrium is reset higher.
Bitcoin uses the same logic. When spot prices drop to $60,000 or less, miners who are not as efficient shut down their operations. The network hash rate is adjusted through Bitcoin’s difficulty mechanism and costs for producing each coin fall.
By May 2026 the average cost per ton of gold will have increased. across all Bitcoin miners sits near $85,604, with the Bitcoin price trading in the mid-$60,000s — meaning the network as a whole is operating at a loss, a configuration that has historically preceded recoveries, not further collapse.
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Source: bitcoinmagazine.com
