Sunday, June 23, 2024

Bitcoin Mining Cost Falls to $45,000 After Inefficient Miners Exit (JPMorgan).

JPMorgan (JPM) stated in a research paper on Thursday that the current hashrate and power usage on the Bitcoin (BTC) network suggest an estimated mining cost of roughly $45,000, down from about $50,000.

The bank stated that it had previously projected a sizable decline in hashrate following the halving due to miners leaving the network who were not profitable. This is now taking place, albeit a little slowly. Last month saw the quadrennial halving, which reduced miner incentives by 50% and slowed the rate of increase in the supply of bitcoin.

The total combined processing power used to mine and process transactions on a proof-of-work blockchain is referred to as hashrate. The report stated that the Runes protocol, a new method of token production on the network, was probably the cause of the delay because it temporarily increased transaction fees.

In the immediate wake of the bitcoin halving, this gave miners a brief boost in revenue, according to analysts led by Nikolaos Panigirtzoglou. They also noted that miners were able to maintain nearly constant block rewards for themselves by using the increase in transaction fees to offset the halving’s loss in issuance reward.

The authors noted that although Runes has given a temporary boost, users’ activity and fees have dropped significantly over the last week or two. This underscores the ongoing difficulty faced by bitcoin miners in maintaining a stable revenue stream, particularly in the post-halving environment.

Power usage on the network has decreased more than hashrate, indicating that miners with inefficient rigs have left the network as the Runes hype subsided and the momentary boost for miners vanished, the bank stated.

The price of bitcoin also has a feedback loop. The paper also noted that as bitcoin prices drop, more unprofitable miners are put under pressure to quit the network, which in turn causes a reduction in hashrate and the cost of producing bitcoin.

JPMorgan believes that there will be no upside for bitcoin in the near future because of a number of previously noted obstacles, including the decline in retail impulse and the absence of encouraging catalysts.

Cryptured Team
Cryptured Team
The writers team at Cryptured.com is composed of passionate and experienced journalists who cover the latest developments in the crypto and blockchain space. They aim to provide accurate, unbiased and easy-to-understand news and information for their readers, as well as insights and analysis from industry experts. The writers team is always on the lookout for new and exciting stories that can help the general public learn more about the potential and challenges of these technologies.
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