JPMorgan Analysts Are Worried About the Lower Cost of Bitcoin Mining
JPMorgan analysts led by Nikolaos Panigirtzoglou are worried that the cost of creating one Bitcoin ($BTC) has fallen from approximately $24,000 at the beginning of June to under $13,000, which may be bad for the price of the cryptocurrency due to increased selling pressure.
Bloomberg reports that experts have observed that the decrease in manufacturing costs is nearly entirely attributable to a reduction in power use, as measured by the Cambridge Bitcoin Electricity Consumption Index. The adjustment is consistent with the efforts of miners to maintain profitability as they deploy more efficient mining devices and eliminate less effective miners.
However, the decreased manufacturing costs may be seen as an impediment to future price increases. JPMorgan’s analysts penned the following:
The drop in the production cost may be seen as bad for the Bitcoin price prognosis moving ahead, despite the fact that it aids miner profitability and may reduce demands on miners to sell Bitcoin holdings in order to increase liquidity or reduce leverage.
Some market players see the manufacturing cost as the bottom of Bitcoin’s price range during a bear market, according to the experts. JPMorgan’s strategists highlighted last month that miner BTC sales might exert downward pressure on the cryptocurrency’s price in the third quarter.
According to a recent statement from miner Core Scientific, the company sold the majority of its Bitcoin assets last month.
Since its inception more than a decade ago, members of the Bitcoin network have generated more than 1 billion addresses. In the midst of an ongoing bear market that has seen BTC fall below $20,000 after reaching a new all-time high of over $69,000 late last year, this milestone is reached.