BlockBeats News, December 5th, a JPMorgan analyst believes that for the recent price trend of Bitcoin, the resilience of Strategy (stock code MSTR) is more important than miner activity. Although this global largest Bitcoin holder has not started selling, Bitcoin miners seem to be facing increasing selling pressure.
JPMorgan Managing Director Nikolaos Panigirtzoglou and his team pointed out in a report on Wednesday that the recent continuous pressure on the Bitcoin price mainly stems from two factors: the recent decline in Bitcoin network hash rate and mining difficulty, and the latest developments around Strategy.
The analyst stated that the decline in hash rate and mining difficulty reflects the interaction of two forces: China reiterating its ban on Bitcoin mining after a surge in private mining activity, and the Bitcoin price decline and high energy costs squeezing profits, causing high-cost miners outside of China to exit the market.
The analyst pointed out that although a hash rate decline usually boosts miners’ revenue, “the Bitcoin price is currently still lingering below its production cost,” bringing selling pressure to the Bitcoin market.
The JPMorgan analyst has currently revised down the estimated production cost of Bitcoin to $90,000, lower than last month’s $94,000. According to the analyst’s estimate, this update is based on the assumption of $0.05 per kilowatt-hour electricity price, and for high-cost producers, for every $0.01 increase in electricity price, their production cost will increase by $18,000.
JPMorgan’s report stated: “Against the backdrop of high electricity prices and a declining Bitcoin price squeezing profits, some high-cost miners have been forced to sell Bitcoin in recent weeks.”
