Bitcoin Mining Data Signals Potential for BTC Rally Despite Profitability Squeeze

By: crypto insight|2025/12/01 18:30:08

Key Takeaways:

Bitcoin’s market dynamics suggest a pivotal moment with its trading price closely aligning with miner production costs.
The current elevated hashrate and reduced hash prices are causing significant stress in Bitcoin mining profitability.
Bitcoin’s dynamic NVT ratio has entered a historically bullish lower band, although a final market adjustment may still be forthcoming.
Weex’s positioning in the market might provide unique opportunities amidst these fluctuations.

WEEX Crypto News, 2025-12-01 10:07:38

Understanding Bitcoin’s Current Market Dynamics

As of November 26, Bitcoin’s trading price saw a notable rally, reaching $91,950. This development comes at a crucial junction for the market, which is experiencing compression in terms of profitability for miners. The production cost, based on insights from Capriole Investments, hovers around $83,873. The electrical expense, a fundamental component of these costs, is significantly lower at $67,099. This proximity of Bitcoin’s trading price to its production cost presents a strategic challenge and an opportunity for the market dynamics.

Historically, when Bitcoin’s market activity aligns closely with miner production costs, it suggests a stabilization phase where inefficient market actors phase out, paving the way for potential recovery or a rally. This pattern is crucial for stakeholders aiming to understand and leverage the cyclical nature of Bitcoin’s market.

The Impact of Tightening Miner Margins

The Bitcoin mining industry is currently navigating through a period of waning profitability. With the miner price at $87,979, the profit margin stands at a tight 4.9%, one of the narrowest margins observed in this market cycle. Typically, such slim margins serve as a stabilizing force, rather than a point of stress, by filtering out inefficient miners and prompting adjustments in mining difficulty.

Recent months have seen miner profitability under pressure, exacerbated by a surge in network competition. The hashrate — a measure of the computational power used in processing transactions and ensuring network security — reached a record high of 1.16 ZH/s in October. This uptick coincided with a drop in Bitcoin’s trading price towards the $81,000 mark as November began.

Hash prices, representing miners’ earnings per unit of computational power, fell below $35 per hash on November 25. This decrease falls well short of the average $45/PH/s earnings previously seen by public miners. Consequently, the time required for mining operations to recover their initial investment, known as the payback period, has extended beyond 1,200 days, compounded by rising financing costs and increased borrowing among miners. This economic backdrop highlights why the current compression of miner margins is significant, potentially signaling a transitional phase within the market dynamics.

The Role of Dynamic NVT in Market Signals

Bitcoin’s Dynamic Network Value to transaction (NVT) ratio has also witnessed a pivotal change, dropping below the lower threshold value of 194. This shift places the ratio within a “value zone,” a stage typically seen during market corrections’ late phases, not the onset. Traditionally, when the NVT ratio enters this zone, it indicates that the market is undervaluing the network’s transaction capability relative to its market cap, thereby teeing up for a wider market reversal if sentiment grows positive.

Nevertheless, while historically a sign of potential bullish reversals, the signal is not definitive. The NVT often does not mark the lowest market point. It has been observed that Bitcoin may hit an initial low after the NVT dips, only to revisit it before ascending again. Thus, while the dip in Dynamic NVT combined with constrained miner margins suggests proximity to a market bottom, it doesn’t predict the immediate end of a declining trend.

Navigating Market Resets and Their Implications

The current scenario — marked by miner stress amidst approaching production costs for spot prices — often triggers a market reset phase. Such periods typically see weaker mining operations exiting the scene, adjustments in mining difficulty, and an easing of selling pressures overall.

This cyclical process has been a recurring theme in Bitcoin’s market journey. It reflects the shifting dynamics between bearish pressures from stressed miner economics and bullish potential fostered by undervalued market activity, as indicated by NVT ratios. Observing these cycles helps market participants anticipate possible shifts, aligned either with broader market corrections or impending recoveries.

Positioning Within Market Phases

For miners and investors, understanding the nuances of these signals can be pivotal. Miners, for instance, must constantly evaluate operational costs against prevailing market prices to determine sustainable production rates. The evolving financial landscape, marked by increased borrowing and high-payback periods for mining equipment, can influence strategic shifts among firms, with some exploring alternative revenue streams such as AI and high-power computing.

Yet, despite these pressures, the ongoing developments hint at a market that might be aligning for future upward trends, particularly if historical patterns hold true. While NVT dips capture undervalued transactions, miner stress leading right back into production costs outlines a backdrop prepared for potential growth, pending a shift in broader market sentiment.

Weex’s Perspective in an Evolving Market

For Weex and similar platforms, market dynamics present opportunities for strategic positioning. Understanding and responding to miner stress and NVT signals can be instructive for refining trading strategies and engaging with the market’s cyclical nature.

By leveraging advanced analytics and paying close attention to traditional market indicators, platforms like Weex can potentially enhance their trading strategies, offer nuanced customer insights, and navigate through evolving crypto landscapes effectively. Providing traders with tailored tools and insights to capitalize on cyclical market changes could benefit Weex’s position within the industry significantly.

FAQ

What is the significance of Bitcoin’s production cost proximity to its spot price?

The proximity of Bitcoin’s production cost to its trading price often indicates periods of market stabilization. It observes inefficient miners exiting, leading to self-correcting market pressures and possible setup for price recovery or rallies.

How does the hashrate impact Bitcoin mining economics?

Hashrate represents the total computational power utilized in the Bitcoin network. A higher hashrate generally signifies more competition among miners, while increased competition without corresponding price increases can squeeze miner profitability.

Why does the Dynamic NVT ratio matter?

The Dynamic NVT ratio compares Bitcoin’s market capital to transaction volume, offering insights into whether the market is overvaluing or undervaluing the network. A low NVT ratio suggests current market undervaluation, potentially signaling a market bottom.

How do current miner margins affect the broader Bitcoin market?

Tight miner margins can act as a market stabilizing force. They often signify near-cycle lows where inefficient operations exit, mining difficulty adjusts, and selling pressures decrease, potentially setting the stage for market adjustments.

How might Weex facilitate trading in the current Bitcoin environment?

By focusing on analytical insights and engaging with market signals like miner stress and NVT ratios, platforms like Weex can devise strategies offering traders nuanced insights into Bitcoin’s cyclical dynamics, aiding in better-informed investment decisions.

Foreword: Today, the People's Bank of China's website published the "Notice of the People's Bank of China, National Development and Reform Commission, Ministry of Industry and Information Technology, Ministry of Public Security, State Administration for Market Regulation, China Banking and Insurance Regulatory Commission, China Securities Regulatory Commission, State Administration of Foreign Exchange on Further Preventing and Dealing with Risks Related to Virtual Currency and Others (Yinfa [2026] No. 42)", the latest regulatory requirements from the eight departments including the central bank, which are basically consistent with the regulatory requirements of recent years. The main focus of the regulation is on speculative activities such as virtual currency trading, exchanges, ICOs, overseas platform services, and this time, regulatory oversight of RWA has been added, explicitly prohibiting RWA tokenization, stablecoins (especially those pegged to the RMB). The following is the full text:

To the people's governments of all provinces, autonomous regions, and municipalities directly under the Central Government, the Xinjiang Production and Construction Corps:

Recently, there have been speculative activities related to virtual currency and Real-World Assets (RWA) tokenization, disrupting the economic and financial order and jeopardizing the property security of the people. In order to further prevent and address the risks related to virtual currency and Real-World Assets tokenization, effectively safeguard national security and social stability, in accordance with the "Law of the People's Republic of China on the People's Bank of China," "Law of the People's Republic of China on Commercial Banks," "Securities Law of the People's Republic of China," "Law of the People's Republic of China on Securities Investment Funds," "Law of the People's Republic of China on Futures and Derivatives," "Cybersecurity Law of the People's Republic of China," "Regulations of the People's Republic of China on the Administration of Renminbi," "Regulations on Prevention and Disposal of Illegal Fundraising," "Regulations of the People's Republic of China on Foreign Exchange Administration," "Telecommunications Regulations of the People's Republic of China," and other provisions, after reaching consensus with the Cyberspace Administration of China, the Supreme People's Court, and the Supreme People's Procuratorate, and with the approval of the State Council, the relevant matters are notified as follows:

I. Clarify the essential attributes of virtual currency, Real-World Assets tokenization, and related business activities

(I) Virtual currency does not possess the legal status equivalent to fiat currency. Virtual currencies such as Bitcoin, Ether, Tether, etc., have the main characteristics of being issued by non-monetary authorities, using encryption technology and distributed ledger or similar technology, existing in digital form, etc. They do not have legal tender status, should not and cannot be circulated and used as currency in the market.

The business activities related to virtual currency are classified as illegal financial activities. The exchange of fiat currency and virtual currency within the territory, exchange of virtual currencies, acting as a central counterparty in buying and selling virtual currencies, providing information intermediary and pricing services for virtual currency transactions, token issuance financing, and trading of virtual currency-related financial products, etc., fall under illegal financial activities, such as suspected illegal issuance of token vouchers, unauthorized public issuance of securities, illegal operation of securities and futures business, illegal fundraising, etc., are strictly prohibited across the board and resolutely banned in accordance with the law. Overseas entities and individuals are not allowed to provide virtual currency-related services to domestic entities in any form.

A stablecoin pegged to a fiat currency indirectly fulfills some functions of the fiat currency in circulation. Without the consent of relevant authorities in accordance with the law and regulations, any domestic or foreign entity or individual is not allowed to issue a RMB-pegged stablecoin overseas.

（II）Tokenization of Real-World Assets refers to the use of encryption technology and distributed ledger or similar technologies to transform ownership rights, income rights, etc., of assets into tokens (tokens) or other interests or bond certificates with token (token) characteristics, and carry out issuance and trading activities.

Engaging in the tokenization of real-world assets domestically, as well as providing related intermediary, information technology services, etc., which are suspected of illegal issuance of token vouchers, unauthorized public offering of securities, illegal operation of securities and futures business, illegal fundraising, and other illegal financial activities, shall be prohibited; except for relevant business activities carried out with the approval of the competent authorities in accordance with the law and regulations and relying on specific financial infrastructures. Overseas entities and individuals are not allowed to illegally provide services related to the tokenization of real-world assets to domestic entities in any form.

II. Sound Work Mechanism

(III) Inter-agency Coordination. The People's Bank of China, together with the National Development and Reform Commission, the Ministry of Industry and Information Technology, the Ministry of Public Security, the State Administration for Market Regulation, the China Banking and Insurance Regulatory Commission, the China Securities Regulatory Commission, the State Administration of Foreign Exchange, and other departments, will improve the work mechanism, strengthen coordination with the Cyberspace Administration of China, the Supreme People's Court, and the Supreme People's Procuratorate, coordinate efforts, and overall guide regions to carry out risk prevention and disposal of virtual currency-related illegal financial activities.

The China Securities Regulatory Commission, together with the National Development and Reform Commission, the Ministry of Industry and Information Technology, the Ministry of Public Security, the People's Bank of China, the State Administration for Market Regulation, the China Banking and Insurance Regulatory Commission, the State Administration of Foreign Exchange, and other departments, will improve the work mechanism, strengthen coordination with the Cyberspace Administration of China, the Supreme People's Court, and the Supreme People's Procuratorate, coordinate efforts, and overall guide regions to carry out risk prevention and disposal of illegal financial activities related to the tokenization of real-world assets.

(IV) Strengthening Local Implementation. The people's governments at the provincial level are overall responsible for the prevention and disposal of risks related to virtual currencies and the tokenization of real-world assets in their respective administrative regions. The specific leading department is the local financial regulatory department, with participation from branches and dispatched institutions of the State Council's financial regulatory department, telecommunications regulators, public security, market supervision, and other departments, in coordination with cyberspace departments, courts, and procuratorates, to improve the normalization of the work mechanism, effectively connect with the relevant work mechanisms of central departments, form a cooperative and coordinated working pattern between central and local governments, effectively prevent and properly handle risks related to virtual currencies and the tokenization of real-world assets, and maintain economic and financial order and social stability.

III. Strengthened Risk Monitoring, Prevention, and Disposal

(5) Enhanced Risk Monitoring. The People's Bank of China, China Securities Regulatory Commission, National Development and Reform Commission, Ministry of Industry and Information Technology, Ministry of Public Security, State Administration of Foreign Exchange, Cyberspace Administration of China, and other departments continue to improve monitoring techniques and system support, enhance cross-departmental data analysis and sharing, establish sound information sharing and cross-validation mechanisms, promptly grasp the risk situation of activities related to virtual currency and real-world asset tokenization. Local governments at all levels give full play to the role of local monitoring and early warning mechanisms. Local financial regulatory authorities, together with branches and agencies of the State Council's financial regulatory authorities, as well as departments of cyberspace and public security, ensure effective connection between online monitoring, offline investigation, and fund tracking, efficiently and accurately identify activities related to virtual currency and real-world asset tokenization, promptly share risk information, improve early warning information dissemination, verification, and rapid response mechanisms.

(6) Strengthened Oversight of Financial Institutions, Intermediaries, and Technology Service Providers. Financial institutions (including non-bank payment institutions) are prohibited from providing account opening, fund transfer, and clearing services for virtual currency-related business activities, issuing and selling financial products related to virtual currency, including virtual currency and related financial products in the scope of collateral, conducting insurance business related to virtual currency, or including virtual currency in the scope of insurance liability. Financial institutions (including non-bank payment institutions) are prohibited from providing custody, clearing, and settlement services for unauthorized real-world asset tokenization-related business and related financial products. Relevant intermediary institutions and information technology service providers are prohibited from providing intermediary, technical, or other services for unauthorized real-world asset tokenization-related businesses and related financial products.

(7) Enhanced Management of Internet Information Content and Access. Internet enterprises are prohibited from providing online business venues, commercial displays, marketing, advertising, or paid traffic diversion services for virtual currency and real-world asset tokenization-related business activities. Upon discovering clues of illegal activities, they should promptly report to relevant departments and provide technical support and assistance for related investigations and inquiries. Based on the clues transferred by the financial regulatory authorities, the cyberspace administration, telecommunications authorities, and public security departments should promptly close and deal with websites, mobile applications (including mini-programs), and public accounts engaged in virtual currency and real-world asset tokenization-related business activities in accordance with the law.

(8) Strengthened Entity Registration and Advertisement Management. Market supervision departments strengthen entity registration and management, and enterprise and individual business registrations must not contain terms such as "virtual currency," "virtual asset," "cryptocurrency," "crypto asset," "stablecoin," "real-world asset tokenization," or "RWA" in their names or business scopes. Market supervision departments, together with financial regulatory authorities, legally enhance the supervision of advertisements related to virtual currency and real-world asset tokenization, promptly investigating and handling relevant illegal advertisements.

（IX） Continued Rectification of Virtual Currency Mining Activities. The National Development and Reform Commission, together with relevant departments, strictly controls virtual currency mining activities, continuously promotes the rectification of virtual currency mining activities. The people's governments of various provinces take overall responsibility for the rectification of "mining" within their respective administrative regions. In accordance with the requirements of the National Development and Reform Commission and other departments in the "Notice on the Rectification of Virtual Currency Mining Activities" (NDRC Energy-saving Building [2021] No. 1283) and the provisions of the "Guidance Catalog for Industrial Structure Adjustment (2024 Edition)," a comprehensive review, investigation, and closure of existing virtual currency mining projects are conducted, new mining projects are strictly prohibited, and mining machine production enterprises are strictly prohibited from providing mining machine sales and other services within the country.

（X） Severe Crackdown on Related Illegal Financial Activities. Upon discovering clues to illegal financial activities related to virtual currency and the tokenization of real-world assets, local financial regulatory authorities, branches of the State Council's financial regulatory authorities, and other relevant departments promptly investigate, determine, and properly handle the issues in accordance with the law, and seriously hold the relevant entities and individuals legally responsible. Those suspected of crimes are transferred to the judicial authorities for processing according to the law.

（XI） Severe Crackdown on Related Illegal and Criminal Activities. The Ministry of Public Security, the People's Bank of China, the State Administration for Market Regulation, the China Banking and Insurance Regulatory Commission, the China Securities Regulatory Commission, as well as judicial and procuratorial organs, in accordance with their respective responsibilities, rigorously crack down on illegal and criminal activities related to virtual currency, the tokenization of real-world assets, such as fraud, money laundering, illegal business operations, pyramid schemes, illegal fundraising, and other illegal and criminal activities carried out under the guise of virtual currency, the tokenization of real-world assets, etc.

（XII） Strengthen Industry Self-discipline. Relevant industry associations should enhance membership management and policy advocacy, based on their own responsibilities, advocate and urge member units to resist illegal financial activities related to virtual currency and the tokenization of real-world assets. Member units that violate regulatory policies and industry self-discipline rules are to be disciplined in accordance with relevant self-regulatory management regulations. By leveraging various industry infrastructure, conduct risk monitoring related to virtual currency, the tokenization of real-world assets, and promptly transfer issue clues to relevant departments.

IV. Strict Supervision of Domestic Entities Engaging in Overseas Business Activities

（XIII） Without the approval of relevant departments in accordance with the law and regulations, domestic entities and foreign entities controlled by them may not issue virtual currency overseas.

（XIV） Domestic entities engaging directly or indirectly in overseas external debt-based tokenization of real-world assets, or conducting asset securitization activities abroad based on domestic ownership rights, income rights, etc. (hereinafter referred to as domestic equity), should be strictly regulated in accordance with the principles of "same business, same risk, same rules." The National Development and Reform Commission, the China Securities Regulatory Commission, the State Administration of Foreign Exchange, and other relevant departments regulate it according to their respective responsibilities. For other forms of overseas real-world asset tokenization activities based on domestic equity by domestic entities, the China Securities Regulatory Commission, together with relevant departments, supervise according to their division of responsibilities. Without the consent and filing of relevant departments, no unit or individual may engage in the above-mentioned business.

(15) Overseas subsidiaries and branches of domestic financial institutions providing Real World Asset Tokenization-related services overseas shall do so legally and prudently. They shall have professional personnel and systems in place to effectively mitigate business risks, strictly implement customer onboarding, suitability management, anti-money laundering requirements, and incorporate them into the domestic financial institutions' compliance and risk management system. Intermediaries and information technology service providers offering Real World Asset Tokenization services abroad based on domestic equity or conducting Real World Asset Tokenization business in the form of overseas debt for domestic entities directly or indirectly venturing abroad must strictly comply with relevant laws and regulations. They should establish and improve relevant compliance and internal control systems in accordance with relevant normative requirements, strengthen business and risk control, and report the business developments to the relevant regulatory authorities for approval or filing.

V. Strengthen Organizational Implementation

(16) Strengthen organizational leadership and overall coordination. All departments and regions should attach great importance to the prevention of risks related to virtual currencies and Real World Asset Tokenization, strengthen organizational leadership, clarify work responsibilities, form a long-term effective working mechanism with centralized coordination, local implementation, and shared responsibilities, maintain high pressure, dynamically monitor risks, effectively prevent and mitigate risks in an orderly and efficient manner, legally protect the property security of the people, and make every effort to maintain economic and financial order and social stability.

(17) Widely carry out publicity and education. All departments, regions, and industry associations should make full use of various media and other communication channels to disseminate information through legal and policy interpretation, analysis of typical cases, and education on investment risks, etc. They should promote the illegality and harm of virtual currencies and Real World Asset Tokenization-related businesses and their manifestations, fully alert to potential risks and hidden dangers, and enhance public awareness and identification capabilities for risk prevention.

VI. Legal Responsibility

(18) Engaging in illegal financial activities related to virtual currencies and Real World Asset Tokenization in violation of this notice, as well as providing services for virtual currencies and Real World Asset Tokenization-related businesses, shall be punished in accordance with relevant regulations. If it constitutes a crime, criminal liability shall be pursued according to the law. For domestic entities and individuals who knowingly or should have known that overseas entities illegally provided virtual currency or Real World Asset Tokenization-related services to domestic entities and still assisted them, relevant responsibilities shall be pursued according to the law. If it constitutes a crime, criminal liability shall be pursued according to the law.

(19) If any unit or individual invests in virtual currencies, Real World Asset Tokens, and related financial products against public order and good customs, the relevant civil legal actions shall be invalid, and any resulting losses shall be borne by them. If there are suspicions of disrupting financial order and jeopardizing financial security, the relevant departments shall deal with them according to the law.

This notice shall enter into force upon the date of its issuance. The People's Bank of China and ten other departments' "Notice on Further Preventing and Dealing with the Risks of Virtual Currency Trading Speculation" (Yinfa [2021] No. 237) is hereby repealed.

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