Bitcoin Mining Cost Drops to $13,000 Amid Crypto Winter
Categories: Crypto News US
Bitcoin Mining Cost Drops to $13,000 Amid Crypto Winter
According to the Global Market Strategy PDF released by leading investment bank JP Morgan, the price of bitcoin (BTC) production has fallen from around US$20,000 in early June to nearly US$13,000.
Bitcoin Miners: Crypto Winter Strikes
Back JP Morgan has found that the production cost of one bitcoin has dropped from an estimated US$24,000 to $13,000, a 10-month low .
The bank's strategists, led by Nikolaos Panigirtzoglu, have found that the recent drop in BTC's cost of production resulted from a combination of the following factors. Despite improvements in profitability indicating that there may be less pressure for miners to sell their bitcoin holdings for liquidity purposes, a reduction in costs is generally viewed as a negative for the overall bitcoin value.
Although opinions differ, data from Macromicro shows that production costs remain stable at around US$17,700. Macromicro justifies this by explaining that the lower the mining cost, the more miners are involved. However, when mining costs exceed miners' revenue, the number will logically drop.
Financing a mining operation
The cost of bitcoin mining depends on a number of variables, chief among which is the cost of electricity by the miners for the machinery they need. Providing the price of bitcoin exceeds the maintenance cost, a mining operation would be profitable. However, mining operations must also consider infrastructure, labor and hardware costs for the maintenance of mining farms, all of which can vary.
This crypto winter is also happening while energy prices are rising globally. Fortunately, when it comes to infrastructure, there is hope that mining costs can be reduced through the deployment of more energy-efficient mining rigs, such as those from Intel and Bitmain.
Bitcoin Falls on Rough Times
The Yuli has been somewhat of a nightmare for bitcoin as it plunged below $19,000 after printing the highest US inflation in 40 years. Economists had initially predicted a June inflation rate of 8.8 percent; However, the reality was 9.1 percent, which meant that there was an immediate drop in the price of BTC.
To add further stress, bitcoin also had to address the stress placed on the hands of diamonds, namely investors who typically avoid selling investments despite a decline or loss. On-chain analytics firm Glassnode found that the total number of bitcoins had exceeded 1 billion, while diamond hands were selling at an average loss of 33 percent.