Bitcoin, the leading cryptocurrency, fell back to the $62,000 level following the FED’s decision. While retail and institutional investors are incurring increasing losses in this drop in Bitc
Bitcoin, the leading cryptocurrency, fell back to the $62,000 level following the FED’s decision.
While retail and institutional investors are incurring increasing losses in this drop in Bitcoin price, Bitcoin miners are also being negatively affected.
According to The Block, US banking giant JPMorgan has addressed the plight of BTC miners amidst Bitcoin price drops.
According to a JPMorgan report, the price of Bitcoin has been below miners’ estimated production costs for five months, increasing pressure on miners’ profitability.
The bank stated in the report that Bitcoin’s hash rate and mining difficulty have become more sensitive to price movements, and many miners are operating near the break-even point.
Over the past six months, the correlation between mining difficulty and BTC price has increased, and a significant number of miners are operating near the break-even point.
According to JPMorgan analysts, it is estimated that approximately 20% of Bitcoin miners are currently unprofitable, and publicly traded miners sold more than 32,000 Bitcoin in the first quarter alone to finance their operations.
This situation makes it more likely that miners will base their decisions about operating their mining equipment on price fluctuations. Because when the BTC price falls below the cost of production, miners with high operating costs are forced to shut down their equipment.
According to JPMorgan’s current estimate, the cost of Bitcoin production is approximately $78,000, while the BTC price is currently trading around $62,500.
JPMorgan notes that as long as Bitcoin continues to trade below its production cost, its hashrate and mining difficulty will remain highly volatile. This could lead to larger and more frequent fluctuations in both Bitcoin price and mining difficulty.
Finally, JPMorgan analysts added that despite their cautious outlook, the current weak market sentiment for Bitcoin could be a bullish signal going forward.
*This is not investment advice.
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