- Owing to changes in hashrate, JPMorgan updated its estimate of the cost of producing Bitcoin to $45,000.
- At around $65,592.37 right now, Bitcoin is performing well this week.
PMorgan has raised its central estimate of the cost of producing one Bitcoin from the prior $42,000 estimate to $45,000. In view of recent adjustments to the BTC mining hashrate—a metric of the overall processing power required to mine Bitcoin—this correction is necessary.
This change, according to claim analysts under the direction of Nikolaos Panigirtzoglou, is a reflection of the changing dynamics of the mining industry.
Bitcoin Production Cost
When the Bitcoin network was halved, JPMorgan first expected a sharp decline in hashrate as less productive and efficient miners would be driven off.
Though slowly, this process seems to be developing. Based on the current hashrate and power usage, JPMorgan has updated their central estimate of the cost of producing Bitcoin to about $45,000, which is far less than the current market values of about $65,000.
JPMorgan analysts calculated in February that it would cost $42,000 to create one Bitcoin. This number served as a price objective for Bitcoin as well, expected to be hit after the post-halving frenzy died down.
At the time of writing, CoinMarketCap has Bitcoin valued at about $65,592.37. After a little 0.21% drop in the last 24 hours, this price is still in a good position, having risen 4.69% in the last week.
Expectations of Prices Following the Update
Panigirtzoglou stressed that JPMorgan still views $42,000 as the medium-term price level, even with the new production cost estimate of $45,000.
He clarified that the hashrate and the mining equipment efficiency—both of which are changing after the halving—have an impact on the projected production costs. Accordingly, when these variables develop, the $45,000 estimate that is now in place may vary.
“The hashrate and mining equipment efficiency are in a state of flux post-halving,” Panigirtzoglou said to The Block. As the hash rate and equipment efficiency change over time, “we get a $45,000 estimate at the moment, but this figure might shift.”
Panigirtzoglou restated that, after hashrate and mining efficiency stabilise, the medium-term production cost goal is $42,000. He said that this stability would take some time and that the volatility in these measurements right now is transient.
Runes Protocol Temporary Boost
Following reports from ETHNews, the introduction of the Bitcoin Runes protocol caused a brief increase in Bitcoin transaction costs following the halving event. This increased, but, turned out to be fleeting.
The research pointed out a sharp fall in Runes protocol user activity and fees within the last week or two, underscoring the continuous difficulties Bitcoin miners have in sustaining profitable revenue streams, especially in the post-halving climate.
Power Use and Mining Efficiency
Outpacing the hashrate dip, power usage on the Bitcoin network decreased noticeably as interest in the Runes protocol declined. This suggests that, a logical result of declining Bitcoin values, unprofitable miners with less effective setups are leaving the network.
This flight, claim the analysts, is a component of a normal feedback loop related to Bitcoin pricing. The hashrate and production cost are further reduced when prices drop since more unprofitable miners quit the network.
The analysts of JPMorgan warned that a number of obstacles have limited the price of Bitcoin’s potential increase. These include a meager demand for Bitcoin and Ether ETFs in Hong Kong and little inflows into U.S. spot Bitcoin ETFs.