- JP Morgan strategists say that the cost of production of Bitcoin has decreased from $13,000 to approximately $24,000.
- “Decrease in electricity use according to the Cambridge Bitcoin Electricity Consumption Index.”
- The decrease in the cost of production could be perceived as negative for the outlook for the price of Bitcoin going forward.
According to Wall Street bank JPMorgan, the cost to produce Bitcoin has dropped to roughly $13,000, from around $24,000 at the beginning of June.
Thus, according to a Bloomberg report, for JPMorgan strategists, led by Nikolaos Panigirtzoglou, the drop in the estimate of the cost of production of Bitcoin is due almost entirely to the “decrease in the use of electricity according to the Index of Cambridge Bitcoin Electricity Consumption”.
They also highlight that the change is consistent with miners’ efforts to protect profitability by deploying more efficient mining rigs rather than the mass migration of less efficient miners, also stating that this could be taken as an obstacle to mining profits. prices.
In a note to clients, the bank explains that while improved profitability could translate into less pressure for miners to sell their Bitcoin holdings for liquidity purposes, the drop in production costs can be seen as somewhat negative for the price of Bitcoin in general.
“While it clearly helps miner profitability and potentially reduces pressures on miners to sell their Bitcoin holdings to increase liquidity or deleverage, the decrease in the cost of production could be perceived as negative for the Bitcoin price outlook. Bitcoin in the future… Some market participants perceive the cost of production as the lower bound of the Bitcoin price range in a bear market.”
It should be noted that for the past month, JPMorgan strategists under the direction of Panigirtzoglou, pointed out that the sale of Bitcoin by miners would put a higher price on Bitcoin until the third quarter, since the operations boost liquidity, cover costs and possibly deleveraging.
