In a recent report seen by decryptInvestment bank JPMorgan estimates that the production cost for me is a Bitcoin That’s down from $24,000 at the beginning of June to just $13,000.
The production cost of bitcoin is an estimate of the average cost for mining one bitcoin per day. This cost mainly depends on the cost of electricity expended by the miners to run their machines, but there are other variables as well.
As long as the price of bitcoin stays above this cost, mining remains profitable.And many market observers suggest that the cost of production could also serve “as a lower limit for bitcoin’s price range in a bear market.”
According to the New York-based bank, a very low level for bitcoin could be $13,000, which is 45% below today’s price.
JP Morgan strategists led by Nikolas said, “While clearly helping miners’ profitability and potentially reducing pressure on miners to sell bitcoin holdings for liquidity or deleveraging, the drop in production costs can be attributed to bitcoin.” Can be considered negative for the price outlook.” Panigirtzoglu wrote.
They based their estimates primarily on the reduction in electricity use as miners deploy more power-efficient mining rigs.
Still, other metrics paint a slightly different picture for the leading cryptocurrency.
according to data drawn from macromicroFor example, the production cost is still a little over $17,700. “When mining costs are less than the market cap of bitcoin, more miners will be involved. When mining costs exceed miners’ revenue, the number of miners will decrease,” the data provider’s site explains.
Both entities calculate the production cost of bitcoin using the Cambridge Bitcoin Electricity Consumption Index (BITCO).CBIC) information. However, the data provided by CBECI depends on the average power cost of the miners, which can be widely divergent and affect the calculations.
Other costs can also vary, including hiring infrastructure, hardware, and staff to maintain mining farms.
“The cost of production varies greatly depending on the type of rig, and the cost of electricity, but also labor costs and facility maintenance,” confirmed Zach Bradford, CEO of bitcoin mining firm CleanSpark. decrypt,
Bradford said his team’s analysis puts production costs even lower than JPMorgan’s.
“Most public miners are running the latest [generation] With rigs, and strategic power management contracts, our internal research puts the number for public miners closer to $12,000,” he said. “But even within a company, it will vary by facility. For example For this reason, CleanSpark has fewer features than this.”
This means that as long as bitcoin stays above $12,000, public miners will make a profit.
bitcoin miner surrender
Despite the difference in production costs, almost all miners have come under pressure following the catastrophic drop in bitcoin since November.
Glassnode outlines this tension using something called pull multiple,
This mathematical model measures the overall income for bitcoin miners; When the metric is particularly low, miners are earning less on average and are more likely to either sell bitcoin holdings or shut down some machines. These days, they are surely earning much less than before.
“Bitcoin miners are earning just 49% over the 12-month average. This means that miner income stress is a likely factor,” wrote Glassnode. recent report,
like events COVID accidentChina’s crypto Sanctionsand more recent price action All are related to a lesser Puel multiple as well as a wider minor capitulation.
Recent headlines confirm the same.
Last month, publicly traded bitcoin miner Core Scientific Inc. sold Around 7,000 bitcoins at an average price of $23,000. Similarly, Algo Blockchain also sold around $15.6 million in the leading cryptocurrency to cover the costs.
Public mining companies have also been heavily affected by the brutal crypto bear market, from a quick look at their stock prices.
Marathon Digital Holdings is down 73% year-over-year, with Riot Blockchain Inc. declined 73% year-over-year, and Core Scientific Inc. 81% year on year decline. And if bitcoin continues to decline, so may these figures.
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