Bitcoin is worth less than it costs to mine, JPMorgan

The weighted effective cost in the production of a bitcoin was of an average of around 4 thousand 60 dollars worldwide in the fourth quarter, according to analysts of JPMorgan Chase & Co.

Since bitcoin itself is currently traded below $ 3,600, it does not seem like a good business. However, the dispersion in the mean is high, which means that there are big winners and big losers.

Chinese low-cost miners pay much less (the estimate is around 2 thousand 400 per bitcoin) by taking direct power purchase agreements with electricity generators such as aluminum smelters that sell excess power generation, analysts at JPMorgan said. in a comprehensive report on cryptocurrencies on January 24.

Electricity tends to be the main cost to the miners, which is necessary to operate the high-power computers that are used to process the data blocks to earn bitcoin.

"The fall in bitcoin prices from around $ 6,500 for much of October to less than $ 4,000 today has made margins increasingly negative for almost all regions, except for Chinese miners. of low cost, "said the analysts, who warned that their cost estimates could be biased upwards due to irregular data and conservative assumptions of efficiency. The cost figures exclude the equipment.

With negative margins, it is expected that more high-cost producers will be forced to abandon, analysts said. That has not happened yet, and the production quota of miners based in the Czech Republic, the United States and Iceland has increased slightly over the past year, JPMorgan said.

If there is capitulation, the remaining miners could see a drop in their costs since they would gain a greater proportion of bitcoin for the same amount of energy consumption. If only Chinese miners survive, the marginal cost could fall to less than $ 260 per bitcoin, analysts said.