JPMorgan calls Bitcoin halving a stress test for miners

How does bitcoin mining work?
How does bitcoin mining work?

The upcoming Bitcoin halving will be a critical test for miners due to lower block rewards and rising costs. The Block writes about this, citing a report by JPMorgan analysts.

“Miners with lower electricity rates will have an easier time coping, while miners with higher costs will struggle after the halving,” said bank officials led by JPMorgan strategist Nikolaos Panigirtzoglou.

According to analysts, halving the block reward has historically had a positive impact on the price of the first cryptocurrency, but created problems through an increase in the cost of mining.

“According to our current Bitcoin production cost model, a change in the price of electricity by one cent per kWh results in a cost change of $4,300. After the halving, this impact will double to $8600, which will increase the vulnerability of producers with higher costs,” the bank’s specialists emphasized.

The growth of the bitcoin hashrate also affects the competition in the industry. However, after the block reward reduction, the indicator will not grow at the same pace, analysts say. At the same time, an increase in the price of an asset or the volume of transaction fees does not necessarily compensate for an increase in the costs of miners.

“At the moment, the decline in hype around the Ordinals creates an additional problem for the income of bitcoin miners,” JPMorgan experts added.

Recall that in the second half of June, miners sent more than $1 billion in the first cryptocurrency to the exchanges, setting a daily record for the inflow of the asset along the way.

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