Sunday, May 26, 2024

Cost of mining Bitcoin drops to 10-month lows.

With mining hardware becoming more efficient, the cost of mining one Bitcoin has dropped to ten-month lows. It has fallen 6.7% since its May peak.

Nikolaos Panigirtzoglou, a leading strategist from JP Morgan, told investors on Wednesday that BTC production costs have fallen to around $13,000 from $24,000 at the beginning of June – the lowest it has been since September of 2021. Experts say lower Bitcoin production costs can ease miner selling pressure and improve profitability. But strategists are still bearish. They believe that the decline in the production cost might be regarded negatively for the Bitcoin price outlook going forward.

Some analysts perceive the production cost as the lower bound for the Bitcoin price range in a bear market. Moreover, some believe BTC price to fall to $13,000 – this would align with the 80%+ drawdowns in the previous two bear markets. Presently, Bitcoin is down nearly 70% from the all-time high of November 2021. BTC production costs rose after price peaks in April and November 2021 and fell back as markets have done.

Experts say the drop in production cost is linked to a decline in electricity consumption. The network’s estimated daily power demand, as per Cambridge University’s Bitcoin energy consumption index, is 9.59 Gigawatts. Over the past month, there has been a decline of 33%. And it’s down 40% from the 2022 peak. It should also be noted that a large number of miners have powered down older and more inefficient mining rigs. This is because the systems have become unprofitable to operate due to surging energy prices and a collapse in Bitcoin prices. This prompted mining profitability to dip by 63% since the beginning of the year.

The fall in Bitcoin production cost can prevent a further fall in profitability and reverse the trend in the coming months.

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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