Treasure chests: How deep can they spawn?

[azure_wolf_22]

Ok, Im pretty sure Ive eaither glitched at a VERY bad time (day 14) and Im blue in the face with digging in a snow biome, max treasure hunter perk, hot spot, dug ALL the snow and dirt from around it, STILL no chest.
Can chests spawn below where you start hitting stone? Or am I digging a glitched fools errand?

[Chaoslink]

It spawns only 2-3 blocks deep. If you've gone deeper you've gone too far. It is very possible to break the chest from collapsing dirt and if you took the perks for finding it AFTER reading the map, it might be outside the bubble (I'd guess this is a possibility).