JPMorgan has revised its estimate for the cost of Bitcoin mining, following the revision of the Cambridge Bitcoin Electricity Consumption Index (CBECI) methodology. The bank now estimates the production cost to be $18,000, down from $21,000. The new methodology takes into account the varying efficiencies of different mining equipment, as miners often upgrade to more efficient machines.
JPMorgan analysts note that the impact of electricity price changes on mining costs has also decreased, but only modestly, with each one cent per kilowatt hour change now inducing a $3,800 change in production cost, compared to the previous estimate of $4,300.
However, the sensitivity of mining costs to electricity prices is expected to double after the 2024 Bitcoin halving event. During a halving, which occurs every four years or after every 210,000 blocks are mined, the number of Bitcoins entering circulation every 10 minutes is halved.
This event significantly affects supply-demand dynamics of Bitcoin and poses a challenge to miners, as their rewards will be reduced. Any changes in electricity costs will have a larger impact on their overall expenses, making cost management even more crucial.
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