Bitcoin production cost decline could be a negative for price, JPMorgan says

JPMorgan Chase & Co. Bitcoin (BTC) production costs have dropped from $ 24,000 in early June to about half now, $ 13,000, according to strategists. Bloomberg News report July 14

A strategist led by Nikolaos Panigirtzoglou states that this reduction in production costs is primarily due to reduced electricity usage.

Cambridge Bitcoin Power Consumption Index sharp It turns out that the energy spent mining Bitcoin is decreasing over time.

Strategists said miners have recently deployed more energy-efficient mining rigs to maintain profitability in the current bear market.

With prices below $ 30,000, some Bitcoin miners struggled to stay operational as they were forced to sell their holdings to meet operating costs and other financial demands.

JPMorgan’s strategist wrote in June that if miners continue to sell BTC, they could be under selling pressure in the third quarter. However, lower production costs can relieve that pressure and leave a profit for miners.

Bitcoin price signs are dark

Many may think that this reduction in production costs is significant for miners, but JP Morgan pointed out that it may be bad for the price of Bitcoin.

The bank reportedly said:

Lower production costs will continue, while reducing the likelihood of clearly helping miners profitability, increasing liquidity, or putting pressure on miners to sell their Bitcoin holdings to de-leverage. It can be seen as negative for the Bitcoin price outlook. Production costs are recognized by some market participants as the lower limit of the Bitcoin price range in the bear market.

Bitcoin has been steadily declining since peaking above $ 69,000 in November and is now trading at less than $ 20,000.

Significant macroeconomic pressures such as inflation, rising interest rates and the prominent implosion of crypto companies have hit the industry.

This raises speculation that Bitcoin’s price could drop to $ 10,000. Investigation..