Propane does not inherently lose BTU output at higher elevations, but the lower oxygen availability from "thinner air" requires appliances to be adjusted, often through a process called derating, to maintain safe and efficient combustion. This adjustment typically involves reducing the fuel input rate by about 4% for every 1,000 feet above 2,000 feet elevation to prevent overfiring and potential carbon monoxide issues.
Having said that, I don't know where the adjustment are on the tankless water heater, as we have the tank version.