Bitcoin Mining Cost Drops to $45K as Inefficient Miners Exit: JPMorgan

JPMorgan has revised its estimate of Bitcoin’s mining cost to approximately $45,000, down from over $50,000. This adjustment comes as inefficient miners exit the network post-halving, reducing overall power consumption despite a delayed drop in hashrate. The recent launch of the Runes protocol temporarily boosted transaction fees and miner revenue, offsetting the halving impact, but this boost has since diminished, according to Coindesk.

According to JPMorgan’s report, the current hashrate and power consumption on the Bitcoin network indicate a significant decline in mining costs. The quadrennial halving, which reduced miner rewards b  50%, initially did not result in the expected immediate drop in hashrate. However, the introduction of the Runes protocol caused a temporary surge in transaction fees, allowing miners to maintain block rewards close to pre-halving levels. As the hype around Runes faded, user activity and fees declined, leading to reduced power consumption and the exit of unprofitable miners.

JPMorgan’s analysts, led by Nikolaos Panigirtzoglou, highlighted that the fall in power consumption was more pronounced than the drop in hashrate, indicating that miners with less efficient rigs were leaving the network. This dynamic creates a feedback loop: as Bitcoin prices decline, more unprofitable miners are pressured to exit, further reducing the hashrate and mining costs.

Despite these adjustments, JPMorgan remains cautious about Bitcoin’s near-term price prospects, citing several headwinds, including a lack of positive catalysts and diminishing retail interest. The bank’s report suggests limited upside for Bitcoin, given the current market conditions and ongoing challenges faced by miners.