Bitcoin recently experienced a historic single-day drop, taking the cryptocurrency from $7,500 to under $4,000 in less than 48 hours. The first-ever cryptocurrency is now trading below the cost required by miners to produce each Bitcoin. Now that miners are better off buying BTC outright, what could this mean for the strength of the underlying network, the asset’s future, the upcoming halving, and the price of Bitcoin? Bitcoin Falls Under Cost of Production, Miners May As Well Buy BTC Instead Bitcoin may be in its most dangerous position yet, following one of the asset’s worst 24-hour drop in its short, ten-year history. As the stock market melts down, and the coronavirus shuts down all human activity, Bitcoin and the rest of the cryptocurrency market also tanked as the globe entered a state of lockdown and panic. The drop took Bitcoin from $10,500 just a month ago to $7,500, then to below $4,000 just days ago. The crypto asset is trading around $5,000 at the time of this writing, which is still well below the cost to produce each BTC. The underlying Bitcoin blockchain protocol is powered by a process called proof of work, which involves miners using computer processing power to make complex calculations to validate each new block. The reward for doing this that miners receive is BTC. But there’s an energy cost associated with operating miners that must be considered. And if that cost is higher than the value of Bitcoin, miners would be better off buying the asset rather than running rigs and continuing to power the network. That’s exactly what has happened now that Bitcoin has fallen to such low prices. It’s at the point where even on the cheapest end of producing each BTC, miners would still struggle to be profitable at current prices and are better off buying outright. Post-Halving Hell: Miner Metrics Suggest The Worst Is Yet To Come According to the current cost of production, on the highest end, it costs around $8,000, and on the low end, it costs roughly $4,800. That implies that most miners are currently running their machines at a loss. The cost of production is also about to rise significantly within the next two months. While the halving was expected to be a bullish event, causing the supply and demand to be thrown off in favor of skyrocketing prices, it very well could end up being bearish this time around. The halving cuts the reward miners receive in half. This means that in just two months when Bitcoin’s halving rolls around, the cost of production will double overnight, taking the aforementioned prices to $16,000 on the high end and $9,600 on the lower end. Mining difficulty will decrease as miners shut off their rigs, and eventually, the cost to produce each BTC will lower to compensate, but the initial, sudden change in reward could have unknown implications. Another metric that follows mining activity, are Bitcoin’s hash ribbons. In the past, these hash ribbons have signaled when miners are about to capitulate, and following this is normally a huge buy signal for Bitcoin. Miners capitulated in late 2018 and again in late 2019. The hash ribbons are currently curling downward and with the cost of production so low, miners could capitulate again, causing yet another massive selloff. The only positive amidst the negative outlook related to Bitcoin mining is that after the destruction ends, a buy signal usually takes Bitcoin to a new all-time high. During past Bitcoin cycles, the hash ribbons had three major phases of capitulation before the new bull run triggered. Bitcoin has had two, and the next major miner capitulation could be the final shakeout before the next bull market finally kicks off.