Blockchain
Bitcoin (BTC) Mining Cost Estimate Drops to $45,000 as Inefficient Miners Exit: JPMorgan
The current hashrate and power consumption of Bitcoin (BTC) The network implies an estimated mining cost of about $45,000, down from $50,000, JPMorgan (JPM) said in a research report on Thursday.
The bank said it had previously predicted a significant drop in hashrate after the halving, as unprofitable miners would abandon the network. This is happening now, but with some delay. THE four-year halvingwhich slows the growth rate of bitcoin supply as miners’ rewards are reduced by 50%, which happened last month.
Hashrate refers to the total combined computational power used to extract and process transactions on a work test blockchain. The reason for the delay was probably the launch of the Rune protocola new form of token creation on the network, which triggered a temporary peak in transaction fees, the report said.
“This provided a temporary boost to miners’ revenue in the immediate aftermath of the bitcoin halving,” wrote analysts led by Nikolaos Panigirtzoglou, adding that “bitcoin miners were able to offset the loss of issuance reward due to the halving with the increase in transaction fees, keeping the block rewards for miners remained almost unchanged.”
“The Runes boost proves short-lived, however, with user activity and fees dropping dramatically over the past two weeks,” the authors wrote, noting that “this highlights the ongoing challenge faced by bitcoin miners to maintain a sustainable source of revenue particularly in the post halving environment.”
As enthusiasm for Rune has faded and the temporary boost for miners has dissipated, power consumption on the grid has dropped more than the hashrate, which shows that unprofitable miners with inefficient rigs have exited, ha said the bank.
There is also a feedback loop with bitcoin prices. “The more bitcoin prices fall, the greater the number of unprofitable miners who are pressured to abandon the Bitcoin network and the greater the resulting decline in bitcoin hashrate and production [mining] cost,” the report adds.
JPMorgan sees limited upside for bitcoin in the near term due to several previously identified headwinds, including the lack of positive catalysts and the disappearance of retail momentum.