The forthcoming Bitcoin halving in the network will be a decisive test for miners due to the reduction in block rewards and rising costs. The Block writes, citing a JPMorgan analyst’s report.
“Miners with lower electricity tariffs will have an easier time coping, whereas operators with higher costs will face difficulties after the halving,” the bank’s analysts led by JPMorgan strategist Nikolaos Panigirtzoglou said.
Analysts say the halving historically had a positive effect on the price of the first cryptocurrency, but it created problems by raising mining costs.
“According to our current cost of production model for Bitcoin, a one-cent change in electricity price per kWh translates into a $4,300 change in costs. After the halving, this impact will double to $8,600, increasing the vulnerability of producers with higher costs,” the bank’s analysts emphasised.
growth in hash rate of Bitcoin also affects competition in the sector. However, after the block reward cut, the metric is not expected to grow at previous rates, analysts say. At the same time, increases in asset price or transaction fee volumes do not necessarily offset miners’ higher costs.
“At the moment, a decline in buzz around Ordinals creates an additional problem for Bitcoin miners’ revenues,” the JPMorgan experts added.
In the second half of June, miners sent to exchanges more than $1 billion in the first cryptocurrency, while setting a daily record inflows of the asset.