‘And he said to them “You are from below, I am from above; you are of this world, I am not of this world. That is why I told you that you would die in your sins, for unless you believe that I am you will die in your sins”.'
Jesus now faced them with the central issue. He was as totally different from them as Heaven was from earth. They were from below. They had no knowledge or experience of where God dwells. They were tied to the ideas of this world. Their minds were unopened. But in contrast to them He was from above, He was not of this world. That is what they needed to recognise. The phrase ‘from above' reflects Psalms 18:16; Psalms 144:7. It is the abode of God and His power.
And the reason why He has stated that they were without hope is because they would not recognise Him for what He was, the One from above, the One Who is not of this world. They did not recognise Him as the ‘I am', something only hinted at here, but made clear in John 8:58. This phrase ‘I am', used in partly hidden form in John 8:12; John 8:28, and used again specifically and unequivocally in John 8:58, is the Name that God revealed to Moses and it was the root of the divine name YHWH (‘the One Who is' - ‘I am what I am' - Exodus 3:14). That is why in Isaiah 43:10 God says, ‘that you may know and believe and understand that I am'. Jesus almost certainly had that verse in mind. He wanted them to know and believe and understand that He was the ‘I am'.
So if they wished to be have eternal life they must accept His otherness, and His power to act, and His eternal being. (See also Isaiah 41:4; Isaiah 43:13; Isaiah 46:4; Isaiah 48:12). At this stage, however, the phrase ‘I am' was not unequivocal and it was thus not seen as provocative. It could alternately mean ‘that I am the Messiah' (Mark 13:6). Some would in fact limit it to meaning ‘that I am He', that is, ‘I am the coming One'.
‘You will die in your sins.' Compare Ezekiel 3:18 where these words are used. The Pharisees' total aim was so to live as to obey all God's laws and by doing so prove themselves faithful members of the covenant. They strove manfully to do this, seeking to fulfil hundreds of requirements, expanded in detail by themselves, in order to attempt to do so, hoping eventually to rise above their sins and prove themselves true members of the covenant. For they were sure that once the covenant was truly fulfilled God would show His favour. But Jesus warned them that unless they came to know Him they would for ever be unsuccessful. What they were striving for would be in vain.
The word for sins here is plural (contrast John 8:21). A sinful attitude of heart results in many sins in the life, and the Pharisees above all, with their hundreds of regulations, were conscious of numerous failings.