Bitcoin (BTC) hashrate continues to hit all-time highs amid intensifying competition among miners ahead of the next halving expected in the second quarter of 2024, JPMorgan Chase & Co. said in a research report on the 13th.
The halving will reduce mining rewards from 6.25 BTC to 3.125 BTC, “resulting in diminishing returns for miners and at the same time substantially increasing the cost of Bitcoin issuance.”
“The Bitcoin halving could have a positive impact on the Bitcoin price given that production costs have historically served as bottoms, but it will be problematic for miners.”
JP Morgan said miners with low power costs will likely survive, while those with high power costs may struggle after the halving.
The bank estimates that a 1 cent change in electricity costs per kilowatt-hour (kWh) changes the cost of Bitcoin production by $4,300. After the halving, the impact of power cost fluctuations will double to $8,600, “increasing the vulnerability of high-cost miners.”
The surge in hashrate means more mining machines have been introduced and more competition among miners, the report said.
The hash rate is unlikely to continue rising at the same pace after the halving, “unless there is a sustained rise in the Bitcoin price that outstrips the cost of production, or a significant increase in transaction fees that can offset the decline in mining rewards,” the report adds.
｜Translation: CoinDesk JAPAN
｜Editing: Takayuki Masuda
｜Original: Next Bitcoin Halving Event Could Be a Stress Test for Miners: JPMorgan