Bitcoin is in a bear market. That much is not contradictory.
What Jim Ferraioli, Director of Digital Currencies Research and Strategy at Charles Schwab, argued on Wednesday in Bloomberg is more accurate and more structured: this selloff has a limited level of cost, and that floor is built not from emotional or chart patterns, but from the physics of energy consumption.
The numbers include a context reduction framework. Bitcoin reached $126,000 in the fall before collapsing to around $60,000 in February — a 50% correction that, while brutal for recent buyers, is a sharp drop from the 75%-plus implosions described before Bitcoin bear markets.
Ferraioli’s core analytical framework focuses on one question: how much does it cost to make Bitcoin? The feedback creates a natural gravitational force that holds many cycles.
For the most efficient miners — those working at scale with next-generation ASIC hardware and access to cheap wholesale power — the cost of producing one Bitcoin remains around $60,000, Ferraioli said.
That number is arbitrary. It represents a nominal cost of powering the facility of about $0.07 per kilowatt hour with the most advanced semiconductor fleet available.
Inefficient miners — those with old ASIC hardware, high power costs, and limited performance limits — bear production costs of about $95,000 per BTC, according to Glassnode data cited in Schwab’s May 2026 research report. That gap between $60,000 and $95,000 defines Bitcoin’s current valuation range.
Bitcoin’s energy floor: Why $60,000 may be marked down
Ferraioli argues that in deep bear markets, the production costs of the best miners have historically been operating as low. February’s low near $60,000 coincides almost exactly with that level, as well as BTC’s 200-week moving average.
BTC selling pressure is not random. It is demographically specific. The investors who are driving the shutdown are those who acquired Bitcoin within the last 18 months – buyers who rode the asset from $80,000 to $126,000 and then watched the gains completely evaporate.
Schwab tracks two cost base metrics to gauge this pressure: the average acquisition cost of US ETF and ETP holders, which stands at around $83,000, and the cost base of an active investor – excluding coins awarded to miners – which sits at around $78,000.
Both of these figures are significantly higher than current prices, putting most new entrants in unrealized loss positions and solidifying $83,000 as the asset ceiling rather than the support floor.
Glassnode’s on-chain data confirms this flexibility. Bitcoin’s recent attempts at rallies have stalled in the ETF’s cost base, which has converged near $83,000, with total losses reaching $1.35 billion for the day and long-term holders exiting high positions. Hedge funds represent about 30% of ETP ownership but are not aligned with the market, making fundamental trades rather than taking directional views – meaning they don’t offer a natural bid when prices fall.
This is where Ferraioli’s analysis takes a turn for the worse. Every major publicly traded Bitcoin miner has announced a pivot toward high-performance computing (HPC) for AI workloads. The economics on their face seem to be in favor of stopping mining: the assumption is that it generates a higher income per megawatt hour than Bitcoin mining during high demand windows.
But the need for AI interpretation is not like 24 hours. Models work hard during business hours and stay idle all night and on weekends.
That creates a structural opportunity that doesn’t take away from BTC mining – it puts on top of it. Schwab’s analysis models Bitcoin as a top source of energy monetization during off-hours, which is assumed to be covered during peak business hour demand.
A data center using this hybrid model maximizes utilization throughout a full 24-hour cycle rather than leaving capacity in the dark when the demand for computing ends. For miners, this translates to stable income, reduced BTC sales forced to cover operating costs, and lower structural risk throughout bear market cycles.
Bitcoin is backed by energy
The basic thesis is one of energy economics. Bitcoin has no income, no free cash flow, and no CEO issuing guidance. Its value, in Ferraioli’s framework, comes from the cost of the energy required to produce it — a cost that is transparent, verifiable, and historically durable.
In commodity markets, the price cannot trade continuously below the cost of production. Producers close, contracts are awarded, and valuations are reset to high.
Bitcoin follows this same logic: when prices drop to $60,000, inefficient miners shut down, the network’s hash rate changes using Bitcoin’s difficulty mechanism, and the cost of producing each new coin decreases.
As of May 2026, the average mining cost for all Bitcoin miners remains close to $85,604, with the price of Bitcoin trading in the mid-$60,000s – which means that the entire network is operating at a loss, a configuration that has historically preceded acquisitions, not continuously and collapsing.
