Bitcoin production cost drops to $13,000 and threatens cryptocurrency, says JPMorgan

The cost of producing Bitcoin (BTC) dropped from $20,000 to around $13,000 in early June, investment bank JPMorgan said in a note sent to its clients.

The drop in the cost of producing the cryptocurrency stems from the “decline in electricity use, according to data from the Cambridge Bitcoin Electricity Consumption Index, although the hashrate (which measures the computational power used in mining BTC) has been fluctuating in recent months without a clear downtrend,” the firm’s strategists wrote.

While improved profitability means there may be less pressure on miners to sell their Bitcoin units for liquidity purposes, the drop in production costs could be negative for the overall price of the crypto asset, the bank added.

JPMorgan recalls that the cost of production serves as a market reference to point out the cryptocurrency’s price bottom – the lower the cost, therefore, the greater the asset’s fall.

“The decline in production cost could be perceived as negative for Bitcoin’s prospects going forward, as it is perceived by some market participants as the lower end of the cryptocurrency’s price range in a bear market.”

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