Let's put it this way: this idea is common, but not entirely accurate. Mining cost is more like a "soft cushion" than an absolute "hard floor" that the price will never fall below.
We can imagine it like gold mining.
Suppose the total cost of mining an ounce of gold (labor, machinery, rent, etc.) is $1800. When the market price of gold is $2500, miners make a profit, and everyone rushes to mine. If the price of gold drops to $1500, mining becomes unprofitable, and most people will naturally stop. As a result, less new gold is produced, supply decreases, and the price finds it difficult to fall further, so the $1800 cost line becomes a strong support.
Bitcoin mining is somewhat similar, but with a crucial difference:
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Costs are dynamic: The Bitcoin network has a "difficulty adjustment" mechanism. When the coin price falls, some miners who cannot afford electricity (high-cost miners) will shut down and exit. At this point, the network's total computing power (hashrate) decreases, and the system automatically lowers the mining "difficulty." For those miners who are still operating, it becomes easier for them to mine the next Bitcoin, which means their "unit cost" also decreases. Therefore, this "cost floor" itself can move downwards.
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Price is primarily driven by consensus and sentiment: Bitcoin is more like a financial asset, and its price is largely determined by market sentiment, macroeconomic factors (such as whether the Fed raises interest rates), people's expectations for its future, whether large institutions are buying, and so on. The vast majority of people who buy Bitcoin do not look at its production cost, but rather expect it to rise in the future. In times of extreme market panic, investors' selling pressure can completely break through the so-called "cost line." This has indeed happened several times historically.
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Miner behavior differs: Some large miners have long-term, cheap electricity contracts with power companies, giving them extremely low costs, allowing them to withstand significant price drops. Additionally, miners don't necessarily sell their mined coins immediately; they might also hoard them, waiting for the price to recover before selling. Therefore, reaching the cost line does not mean that selling pressure will immediately cease.
To summarize:
Mining cost is a very important reference indicator. It determines whether the mining industry can be profitable and influences miners' behavior. When the coin price approaches the cost line for most miners, it does create a certain psychological and market support, as people might think, "It's at cost price, it must be close to the bottom, right?"
However, it is by no means an unbreakable value floor. In the face of significant fluctuations in financial markets, any "cost floor" can be temporarily breached. Bitcoin's true value floor is theoretically zero, as it is ultimately supported by the consensus and confidence of all global users.