Jpmorgan analysts say the cost of producing Bitcoin has fallen to about $13,000, so does that mean the price will follow suit?
According to a report by jpmorgan strategist Nikolaos Panigirtzoglou, the average production cost of bitcoin was $24,000 in early June, then fell to $15,000 at the end of the month and $13,000 as of Wednesday.
In general, the cost of producing bitcoins for miners can be derived from their electricity bills, since electricity accounts for 95% of their operating costs.
So miners need bitcoin at a certain price in order for them to earn more in Bitcoin than their electricity bills.
Citing data from the Cambridge Bitcoin Power Consumption Index (CBECI), the jpmorgan report points out that the cost of producing Bitcoin is falling because electricity is being used less and miners are trying to deploy a new generation of faster, more energy-efficient equipment to ensure the profitability of their mines.
While miners will help ease the wave of bitcoin selling after they become more profitable, falling production costs could also be a major obstacle to higher prices, jpmorgan said.
Some market participants believe that the minimum price of bitcoin is determined by the break-even price of bitcoin’s production cost, that is, the lower bound of bitcoin’s price range in a bear market.
However, there are also people who believe that this statement is not accurate, because for most of the physical commodity supply is mainly decided by the production and consumption demand, but speculation cause encryption currency investors is to make a decision according to the expectations of future price, rather than the current supply and demand curve, so the cost of mining the simple calculation can hardly provide insight into the market,
The decisive factors for the price of the currency are more likely to be the cessation of mining and the adjustment of mining difficulty.