JP Morgan estimates the cost of mining one Bitcoin is now $45,000, up $3,000 since March 2024. Concurrently, the bank also predicts a decrease in Bitcoin’s price, which is expected to approach this production cost.

JP Morgan estimates the cost of mining one bitcoin at around $45,000

In a recent report, JP Morgan estimates that the average cost of mining one Bitcoin has risen to $45,000, up $3,000 from the last estimate in March 2024.

This increase in mining costs is primarily attributed to Bitcoin’s 4th halving, which occurred in April. The halving, which takes place every 210,000 blocks or approximately every four years, halves the miners’ reward from 6.25 BTC per block to 3.125 BTC, equivalent to just over $200,000.

This event raises the cost of mining BTC, reducing miners’ profitability and forcing some to go bankrupt or shut down less profitable machines.

Instead, the price of BTC continued to rise, reaching nearly $74,000, and has been stabilizing above $60,000 for several weeks.

In its new report published on Thursday, May 16, 2024, JP Morgan emphasizes that the price of Bitcoin will eventually fall to align with its production cost, estimated at $45,000.

JP Morgan predicts a decline in bitcoin’s price

In April 2024, the CEO of Marathon Digital, the largest mining company in the U.S., estimated their post-halving breakeven point at around $46,000 per Bitcoin, which aligns with JP Morgan’s estimate.

Earlier this week, during an audio live session on the X network, we hosted Guillaume Girard, a research analyst at UTXO Management. We discussed the halving’s impact on the mining industry and a report he worked on, published by Galaxy. This report estimated that 15% to 20% of Bitcoin’s total hashrate might withdraw from the network after the halving.

These estimates were made when Bitcoin was around $50,000. Guillaume explained that if the price remains around $60,000, as it has for over two months, a smaller proportion of miners than initially estimated would need to shut down their equipment.

Since the halving in April, the average global hashrate has decreased by approximately 8%, from 639 EH/s on April 28 to 587 EH/s today.

Several factors influence Bitcoin miners’ profitability. Besides the BTC price, which determines the dollar amount of block rewards, transaction fees collected by the network also play a crucial role.

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Except for a brief period of very high fees at the end of April, caused by the Runes protocol, miners now collect very few fees. For instance, block number 843,825, with about 10 sats/vB, collected only 0.092 BTC in fees, roughly $6,000.

While miners can exert downward pressure on Bitcoin’s price by selling their reserves, there is no direct correlation between miners’ profitability and the BTC price. JP Morgan’s predictions about a drop in Bitcoin to its production cost are purely speculative.

Source : Coindesk