JPMorgan · Bitcoin · US Senate · The Block
JPMorgan confirms bitcoin crossing $85,000 production cost could ease miner selling pressure
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Bitcoin's recent move above JPMorgan's estimated production cost of around $85,000 could give miners relief and reduce the risk of forced selling if sustained, the bank's analysts said.
Key facts
- Hash rate has fallen about 19% from its peak last October, while mining difficulty has declined roughly 15%, the analysts said
- The last time bitcoin remained below its estimated production cost for a similar period was in 2018, when it stayed below that level for about 224 days, the analysts noted
- Bitcoin had spent 280 days below the estimated average cost of producing one BTC before rising above it during this week's rally, the JPMorgan analysts led by Nikolaos Panigirtzoglou said in a report
- The Funding newsletter: Stay on top of the latest crypto VC funding and M&A deals, news, and trends with their free bi-monthly newsletter, The Funding
Summary
Bitcoin had spent 280 days below the estimated average cost of producing one BTC before rising above it during this week's rally, the JPMorgan analysts led by Nikolaos Panigirtzoglou said in a report Wednesday. The analysts said bitcoin's production cost has historically acted as a "soft floor" for its price. The analysts said bitcoin's rally despite the U.S. Senate's failure to advance the Clarity Act was consistent with investors closing bearish positions, as the analysts pointed out last week. Bitcoin miners have managed the extended period of weak profitability by moving machines to regions with cheaper electricity, selling older rigs, and placing some equipment on standby, the analysts said, noting that they have also scrapped or recycled less efficient machines.