JPMorgan Says Bitcoin Production Cost Drops 50% to $13,000, Why This Is Negative for BTC?

Bhushan Akolkar
July 14, 2022
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Bitcoin Miner Northern Data Revenue 2024

Wall Street banking JPMorgan has recently published a report that suggests that the Bitcoin production cost has dropped 50% over the last month. Currently, the BTC production cost stands at $13,000 down from the $24,000 cost at the start of June 2022.

JPMorgan strategists led by Nikolaos Panigirtzoglou wrote that this drop comes amid the fall in electricity use as per data from Cambridge Bitcoin Electricity Consumption Index.

Courtesy: Bloomberg

The banking giant notes that this is an effort y the miners to protect profitability and deploy efficient rigs. However, it could also serve as a major obstacle to any gains in the Bitcoin price. The JPMorgan strategists wrote:

“While clearly helping miners’ profitability and potentially reducing pressures on miners to sell Bitcoin holdings to raise liquidity or for deleveraging, the decline in the production cost might be perceived as negative for the Bitcoin price outlook going forward. The production cost is perceived by some market participants as the lower bound of the Bitcoin’s price range in a bear market.”

Bitcoin Miner Capitulation

During the second quarter of 2022, Bitcoin miners were on a selling spree. As the Bitcoin price corrected a staggering 70% from its all-time highs in November 2021, miners had to offload more quantity in order to cover their operational costs.

Last month, JPMorgan strategists said that Bitcoin could further witness selling pressure during the third quarter as well. Miners are further likely to liquidate their holdings going ahead. Also, if the BTC production has actually gone to $13,000 as per JPMorgan, miners might have a good profit to make on its new production.

On-chain data provider Glassnode recently shared its insights wherein it notes that long-term holder (LTH) capitulation. The report adds:

“There is an increased probability that a long-term holder (LTH) capitulation is underway. Bitcoin investors are not out of the woods yet”.

On the upside, Bitcoin (BTC) still has to cross its 200-day EMA at around $22,500 and hold above that level to resume the uptrend.

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Investment disclaimer: The content reflects the author’s personal views and current market conditions. Please conduct your own research before investing in cryptocurrencies, as neither the author nor the publication is responsible for any financial losses.
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Why Trust CoinGape

CoinGape has covered the cryptocurrency industry since 2017, aiming to provide informative insights Read more…to our readers. Our journal analysts bring years of experience in market analysis and blockchain technology to ensure factual accuracy and balanced reporting. By following our Editorial Policy, our writers verify every source, fact-check each story, rely on reputable sources, and attribute quotes and media correctly. We also follow a rigorous Review Methodology when evaluating exchanges and tools. From emerging blockchain projects and coin launches to industry events and technical developments, we cover all facets of the digital asset space with unwavering commitment to timely, relevant information.

About Author
About Author
Bhushan is a seasoned crypto writer with over eight years of experience spanning more than 10,000 contributions across multiple platforms like CoinGape, CoinSpeaker, Bitcoinist, Crypto News Flash, and others. Being a Fintech enthusiast, he loves reporting across Crypto, Blockchain, DeFi, Global Macros with a keen understanding in financial markets. 

He is committed to continuous learning and stays motivated by sharing the knowledge he acquires. In his free time, Bhushan enjoys reading thriller fiction novels and occasionally explores his culinary skills. Bhushan has a bachelors degree in electronics engineering, however, his interest in finance and economics drives him to crypto and blockchain.
Investment disclaimer: The content reflects the author’s personal views and current market conditions. Please conduct your own research before investing in cryptocurrencies, as neither the author nor the publication is responsible for any financial losses.
Ad Disclosure: This site may feature sponsored content and affiliate links. All advertisements are clearly labeled, and ad partners have no influence over our editorial content.