According to jpmorgan, the cost of producing bitcoin has fallen from around $24,000 in early June to around $13,000 today, which could have a negative impact on future prices.
Nikolaos Panigirtzoglou and other bank strategists wrote in a note Wednesday that the drop in production costs was almost entirely due to lower electricity consumption, This can be seen in the Cambridge Bitcoin Electricity Consumption Index. The change is consistent with a trend among miners to protect profits by deploying more efficient mining machines, the report said.
"While this helps miners' profitability and reduces the pressure on miners to sell bitcoin assets to boost liquidity or deleverage, the reduction in production costs could be seen as negative for bitcoin's price outlook," the strategists wrote. "Some market participants see production costs as the lower end of bitcoin's price range in a bear market."
Bitcoin has struggled since hitting a high of nearly $69,000 in November. Risky assets were widely sold off as the Federal Reserve raised interest rates to curb inflation. The world's largest cryptocurrency is down about 60% so far this year and has been hovering around $20,000 for almost a month.
Jpmorgan strategists led by Panigritzoglou said last month that miners were selling bitcoin to boost liquidity, cover costs and potentially deleverage, likely keeping the price under pressure in the third quarter.
Miner Core Science Inc. Its latest monthly report, released last week, showed it sold most of its bitcoin holdings in June. These listed miners are also struggling as cryptocurrencies tumble. Year-to-date, Marathon Digital Holdings Inc. Riot Blockchain Inc., down 76%. Down 78%, Core Science down 86%.