JPMorgan has adjusted its estimation of Bitcoin’s production costs, revising it from $21,000 to $18,000. This adjustment is in response to the Cambridge Bitcoin Electricity Consumption Index (CBECI) updating its methodology for tracking and estimating the electricity consumption of the Bitcoin network.
The revised methodology has implications for mining costs, with JPMorgan analysts noting that future changes in electricity prices will have a comparatively lower impact. They discovered that changes in electricity costs can significantly reduce the cost of producing one Bitcoin.
The sensitivity of mining costs to electricity prices has decreased slightly to $3,800 with the new CBECI methodology, compared to the previous $4,300 change for every one cent per kilowatt hour. This sensitivity is expected to double after the 2024 halving event, which will reduce miners’ rewards by half. Therefore, cost management will become more important as electricity costs will have a greater impact on overall mining expenses.
Bitcoin’s price has dropped by 13% over the past month, falling below $29,000. However, there has been a slight gain in the past 24 hours, with Bitcoin trading at around $25,902. Despite the recent decline in price and market cap, there has been an inflow of $3 billion in the past 24 hours. However, the trading volume has significantly decreased compared to previous levels.
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