Wall Street bank JPMorgan recently released a report suggesting that the cost of producing Bitcoin fell 50 percent in the last month. Currently, the BTC production cost has dropped from $24,000 at the beginning of June 2022 to $13,000. Here are the details…
Bearish prediction for Bitcoin from JPMorgan
JPMorgan strategists led by Nikolaos Panigirtzoglou wrote that this decline comes amid a decline in electricity use, according to data from the Cambridge Bitcoin Electricity Consumption Index. The banking giant states that this is an effort by miners to maintain profitability and establish efficient platforms. However, it can also serve as a major barrier to any gains in Bitcoin price. JPMorgan strategists wrote:
While clearly helping miners’ profitability and potentially reducing pressure from miners to sell their BTC holdings to increase liquidity or reduce leverage, the reduction in the cost of production could be perceived as negative for the forward Bitcoin price outlook. The cost of production is perceived by some market participants as the lower end of the Bitcoin price range in a bear market.
Expectation of capitulation from BTC miners
As we have also reported as Kriptokoin.com, in the second quarter of 2022, Bitcoin miners were in a sales frenzy. Bitcoin price has corrected as much as 70 percent from its all-time high in November 2021. Meanwhile, miners had to unload more to cover their operating costs.
Last month, JPMorgan strategists said that Bitcoin could witness selling pressure in the third quarter as well. Miners are even more likely to liquidate their holdings in the future. Also, according to JPMorgan, if BTC production really hit $13,000, miners could have a good profit to make from their new production.
On-chain data provider Glassnode recently shared analysis that highlights long-term investor (LTH) capitulation. According to the report, the capitulation of long-term investors may continue. It is reported that Bitcoin investors have not yet appeared. On the upside, Bitcoin (BTC) is still struggling to surpass its 200-day EMA around $22,500. According to many, it has to hold above this level to maintain the uptrend.
Hashrate has dropped
Meanwhile, the hashrate in BTC mining fell. According to data from BTC.com, Bitcoin’s hashrate has dropped more than 27 percent in 24 hours to 159.41 exahash per second (EH/s), the lowest level since February of this year. Multiple crypto miners in Texas, a US mining hub, have halted operations amid power surges amid a scorching heatwave.
The Texas Electricity Reliability Council (ERCOT) is calling on homes and businesses to limit peak time consumption as temperatures rise above 100 degrees in most of the state’s major cities. To mine a Bitcoin, a miner needs to verify transactions on the Blockchain. Bitcoin’s mining difficulty, an indicator of how hard miners have to work, was at 29,153 trillion on Wednesday. It’s down 3.7 percent from a month ago.
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