BTC Production Costs Fall from $24,000 to $13,000 in a Month: JPMorgan
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BTC Production Cost Drops 50% in a Month
According to a report from Bloomberg, strategists led by Nikolaos Panigirtzoglou, citing a note from the Cambridge Bitcoin Electricity Consumption Index, stated that the drop in the production cost comes amid the fall in electricity use.
According to the banking giant, this is an effort by 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.
"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," the JPMorgan strategists wrote.
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 it's all-time highs in November 2021, forcing miners to offload more quantity in order to cover their operational costs.
Last month, strategists from JPMorgan stated that Bitcoin could further witness selling pressure during the third quarter as well where miners were likely to liquidate their holdings further ahead.