JPMorgan lowers bitcoin mining cost estimate following CBECI revision

JPMorgan has lowered its bitcoin manufacturing value estimate following current revisions to the Cambridge Bitcoin Electrical energy Consumption Index methodology.

“The present bitcoin manufacturing value falls to round $18,000 with the brand new methodology vs. $21,000 with the previous methodology,” JPMorgan analysts led by Nikolaos Panigirtzoglou wrote in a report on Wednesday. Accordingly, electrical energy worth adjustments will now have a smaller impact on bitcoin mining prices, the analysts famous.

The present market worth of bitcoin is round $25,800, in line with CoinGecko information.

“We had beforehand calculated that every one cent per kWh [kilowatt hour] change within the electrical energy value induces a $4,300 change within the bitcoin manufacturing value. After the revised CBECI methodology, we see this sensitivity declining, however solely modestly to round $3,800,” the analysts mentioned.

“This sensitivity would mechanically double put up the 2024 halving occasion,” they added.

That is as a result of the upcoming bitcoin halving occasion will lower the rewards miners obtain in half, and any adjustments in electrical energy prices can have a bigger impression on their general bills, making value administration much more essential for miners.

JPMorgan reiterated Wednesday that the halving occasion could possibly be a stress take a look at for bitcoin miners, particularly given the excessive sensitivity of the bitcoin manufacturing value to electrical energy prices.

New CBECI methodology

The Cambridge Centre for Different Finance final week revised the methodology to boost the accuracy and reliability of the index, which tracks and estimates the electrical energy consumption of the Bitcoin community. The brand new CBECI methodology acknowledges that not all mining tools contributing to Bitcoin’s hash fee ought to be handled equally as a result of, in actuality, miners continuously improve to newer, extra environment friendly tools or function a mixture of numerous machines with differing efficiencies.

“In conclusion, we performed this evaluation to check our speculation that will increase in community hash fee can possible be attributed to extra just lately launched mining {hardware},” the Cambridge Centre for Different Finance mentioned. “This speculation was based mostly on U.S. import information, and we sought extra proof to validate it.”

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