During the September rally, Bitcoin has crossed the $85,000 mark for the first time in 280 days, a level identified by JPMorgan as the average cost of mining one BTC. This information was reported by The Block, citing the bank's report.

Estimated cost of Bitcoin mining. Source: JPMorgan/The Block.

Analysts suggest that if Bitcoin maintains its position above $85,000, it could alleviate pressure on miners and reduce the risk of forced sales.

At the time of writing, Bitcoin is trading around $84,000.

Hourly BTC/USDT chart from Binance. Source: TradingView.

JPMorgan describes the estimated mining cost as a "soft bottom" for Bitcoin's pricing. Should the cryptocurrency trade below this threshold for an extended period, miners facing high energy and equipment costs may operate at a loss, leading them to sell more coins, halt operations, or exit the market altogether.

The last comparable situation occurred in 2018 when Bitcoin traded below its estimated mining cost for about 224 days. Experts believe that when profitability declines, the most expensive miners shut down operations, resulting in a decrease in hash rate and mining difficulty.

In June, JPMorgan assessed the average mining cost of one BTC at approximately $78,000, while Bitcoin was priced around $62,500. At that time, about 20% of miners were operating at a loss, according to CoinShares.

Miners Shift to AI

Another contributing factor is the transition of some miners to AI infrastructure. JPMorgan estimates that the Bitcoin hash rate has decreased by about 19% from its October peak, while mining difficulty has dropped by approximately 15%.

Bitcoin network hash rate. Source: JPMorgan/The Block.

Many public miners have lowered their hash rate growth forecasts due to long-term contracts in the AI sector. Analysts at JPMorgan believe these agreements provide more predictable revenue per megawatt of power compared to Bitcoin mining, especially amid low profitability.

JPMorgan posits that the reallocation of some mining capacities could slow the growth of the network's hash rate. Consequently, the estimated mining cost may also increase more gradually outside of halving periods.

It is noteworthy that during the first half of the year, public Bitcoin miners reduced their realized hash rate by 56 EH/s, or 15%. Most of the freed capacity was redirected towards developing AI infrastructure.

In September, CoinShares reported that for the first time, mining companies collectively fell below the breakeven point in the second quarter.

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