The American banking giant, JPMorgan, has updated its Bitcoin halving prediction, affecting miner profits. Is there any cause for concern?
According to Benzinga, JPMorgan analysts have revised their estimate of Bitcoin production costs, lowering it from $21,000 to $18,000.
Under the guidance of Nikolaos Panigirtzoglou, JPMorgan analysts note in their latest report that this adjustment comes alongside changes in the methodology used by the Cambridge Bitcoin Electricity Consumption Index (CBECI).
As many are aware, CBECI has long played a crucial role in monitoring and estimating the electricity consumption of the Bitcoin network.
However, recent changes in CBECI’s methodology have significantly impacted the estimated production costs of Bitcoin.
“Bitcoin production costs have now dropped to around $18,000 with the new methodology compared to $21,000 with the old methodology,” wrote JPMorgan analysts in their report.
This adjustment indicates that changes in electricity prices will have a relatively smaller impact on mining costs.
Beyond these key figures, analysts have found that fluctuations in electricity costs can play a crucial role in reducing the production cost of a single Bitcoin.
According to the new CBECI methodology, this sensitivity has slightly decreased to approximately $3,800 for each cent per kilowatt-hour (kWh), down from the previous estimate of $4,300.
However, what makes this adjustment particularly interesting is the anticipated response to the upcoming Bitcoin halving event in 2024.
Halving, a recurring event that takes place every four years or after every 210,000 mined blocks, is a significant moment that greatly impacts the supply and demand dynamics in the crypto market.
During the Bitcoin halving event, the block reward, which controls the amount of new Bitcoins entering circulation roughly every 10 minutes, is reduced by half.
This event, akin to a stress test for Bitcoin miners, is crucial given the high sensitivity of Bitcoin production costs to electricity expenses.
JPMorgan’s analysis suggests that this sensitivity will double after the 2024 Bitcoin halving event. Consequently, miners are expected to witness a halving of their rewards.
Bitcoin Market Value
According to News BTC, amidst these shifting production cost estimates and approaching the 2024 halving event, the price of Bitcoin continues to exhibit volatility.
Over the past month, the leading cryptocurrency has experienced a 13 percent decline, falling below the $29,000 mark.
Although the trend has been downward, the last 24 hours have seen Bitcoin regain some ground, trading at $25,902 at the time of writing, reflecting an increase of nearly 1 percent.
However, the overall market value of Bitcoin has declined, losing over $70 billion in the past month.
While the last 24 hours have witnessed an influx of $3 billion in funds, it indicates that despite the turbulent market conditions, there is still investor interest. However, it should be noted that Bitcoin trading volume has fluctuated, dropping from its peak of $14 billion to as low as $3.5 billion in the recent past, reflecting the typical uncertainty and volatility in the crypto space.
This news is only analytical and informative and is not a recommendation for investment in any way.
