Latest / The Cryptocurrency Economy with Fexingo: Bitcoin, Ethereum, and Digital Money Markets / Why Bitcoin Hashrate Hits New Highs as Price Falls
Transcript
- Lucas: Bitcoin price drops eight percent in five days, and the hashrate hits an all-time high. That is not the relationship the old playbook predicted. Luna: The old playbook said falling price means miners unplug, hashrate drops, and that eventually sets a floor. We are seeing the opposite. Lucas: Exactly. As of this morning, June 6, 2026, Bitcoin is at $61,131, down 8.4 percent in five days. Meanwhile, the seven-day moving average of hashrate just crossed 800 exahash per second for the first time. Luna: So what changed? Are miners just ignoring price signals now? Lucas: Partly, but it is more structural. The mining industry has transformed over the past two years. We did episodes on gas-flare mining and grid balancing, and those are exactly the forces that decouple hashrate from spot price. Luna: Right, because if your power is essentially free or even paid for, price dropping twenty percent doesn't force you offline. Lucas: That is the key insight. A growing share of hash comes from operations where electricity is a byproduct—stranded natural gas, flare gas, or sites that earn demand-response payments from grid operators. Their marginal cost of running one more ASIC is near zero. Luna: And that changes the supply curve for Bitcoin. The old models assumed miners have a uniform power cost around four to five cents per kilowatt-hour. Now you have a huge cohort with cost essentially zero. Lucas: JPMorgan published a note last month estimating that roughly 30 percent of global hashrate now comes from operations with power costs under two cents, much of it from flared gas or curtailed renewables. That cohort does not shut down when price drops—they keep mining as long as the machine itself isn't broken. Luna: So the classic 'hash ribbons' indicator, where hashrate drops signal miner capitulation and a price bottom—that is broken too? Lucas: It still works for the marginal, high-cost miner—typically operations in China or Kazakhstan paying five to seven cents per kilowatt-hour. But those miners are a shrinking slice. The dominant marginal cost now is for newer machines: the S21 Pro and similar rigs have an energy efficiency that even at three-cent power, the break-even Bitcoin price is around 45 to 50 thousand dollars. Luna: So at 61 thousand, most miners are still profitable. No reason to shut down. Lucas: Correct. And the bigger miners—companies like Marathon, Riot, CleanSpark—are hedged. They sell futures or options to lock in prices above cost. They also earn revenue from grid services. So spot price volatility just doesn't hit their cash flow the way it did in 2022. Luna: It almost sounds like Bitcoin mining is becoming more like a regulated utility business than a pure commodity production. Fixed revenue streams, hedging, long-term contracts. Lucas: That is exactly the trajectory. And it is why we should be careful about interpreting hashrate as a bullish signal. Hashrate going up does not necessarily mean price is about to rally. It can just mean the industry got more efficient. Luna: Let's talk about what that means for the price floor. If the old floor was the cost of the most expensive miner, and that floor has dropped, then Bitcoin could trade lower without triggering a supply shock. Lucas: Right. The marginal cost of production has shifted down. If the highest-cost active miners have a break-even around 45 to 50 thousand, then the theoretical price floor is lower than a lot of people think. We saw that in late 2025 when Bitcoin spent a couple weeks in the high forties and hashrate barely budged. Luna: But the market is not pricing that in yet. Most on-chain analysts still talk about the 60k level as a major support. If the floor is really at 50, we have more downside risk. Lucas: We do. And that is the conversation a lot of institutional allocators are having right now. They look at hashrate hitting new highs while price is falling and they ask: is this resilient or is this denial? I think the answer is structural resilience, but it does mean the old models overestimate the pain threshold. Luna: Let's look at the other side: if hashrate stays high and price stays low, difficulty will keep rising, which squeezes the least efficient miners. Eventually that forces some offline, but slowly. Lucas: Yes, the difficulty adjustment is every two weeks. If average hashrate stays elevated, difficulty goes up, and the low-cost miners earn less Bitcoin per hash. But because their power cost is so low, they can absorb it. It is a long, slow grind rather than a sharp capitulation event. Luna: Walking through the economics of Bitcoin mining with us, it really makes you appreciate how much the industry has matured. If that kind of insight is valuable to you, and you want to keep this show ad-free and independent, listeners can support us at buy me a coffee dot com slash fexingo. No pressure, just a way to keep the conversation going. Lucas: Yeah, we really appreciate that. It is what lets us dig into these structural shifts without worrying about ad breaks. So, back to the mining economics: one thing I want to highlight is how the market is responding to the slow-bleed scenario. Luna: You mean the options market? I saw that put-call skew for Bitcoin has widened to levels not seen since the 2022 bear market. Lucas: Exactly. The 25-delta risk reversal for 30-day Bitcoin options is heavily skewed to puts. That tells you professional traders are hedging downside, not speculating on upside. They see the same structural picture: hashrate high, price soft, no catalyst. Luna: Yet the futures basis is still positive. Perpetual funding rates are slightly negative but not extreme. So it is not panic. It is a kind of cautious repricing. Lucas: Right. And that might be the healthiest environment for a mature asset. No euphoria, no despair. Just a market slowly recalibrating to new production cost realities. Luna: So where does that leave the Bitcoin investor? If the floor is lower than we thought, but the network is more resilient, is the risk-reward actually better or worse? Lucas: I think it depends on time horizon. For short-term traders, the risk of a grind lower to 50 thousand is real. For long-term holders, the lower floor is compensated by a more robust network that can survive prolonged bear markets. The hash is not going to disappear. Luna: And that is ultimately what gives Bitcoin its value: the security budget, the proof of work. If that is stronger than ever, maybe the price will eventually follow. Lucas: Maybe. But it is not automatic. The relationship between hashrate and price has changed, and we have to update our mental models. The hash is not a leading indicator of price anymore. It is a lagging indicator of industry efficiency. Luna: That is a good line to end on. Next episode, let's look at whether Ethereum is facing a similar dynamic with staking yields. Lucas: Absolutely. That is a whole different can of worms.