Bitcoin Surpasses Mining Cost for First Time in 280 Days, Says JPMorgan

Bitcoin surpasses mining cost for first time in 280 days.

During the September rally, Bitcoin rose above $85,000 for the first time in 280 days, a level JPMorgan estimates as the average cost of mining 1 BTC. This was reported by The Block citing the bank’s report.

Analysts believe that if Bitcoin remains above $85,000, the pressure on miners and the risk of forced sales will decrease.

At the time of writing, the asset is trading around $84,000.

JPMorgan refers to the estimated cost of Bitcoin production as a “soft floor” for its prices. If the cryptocurrency trades below this level for an extended period, miners with high electricity and equipment costs may become unprofitable. They would then need to sell more coins, halt operations, or exit the market.

A comparable period occurred in 2018 when digital gold was below the estimated production cost for about 224 days. Experts estimate that when profitability declines, the most costly miners shut down operations, leading to a reduction in hash rate and mining difficulty.

In June, JPMorgan estimated the average cost of mining 1 BTC at approximately $78,000 when Bitcoin was priced around $62,500. At that time, about 20% of miners were operating at a loss, according to CoinShares.