JPMorgan: Bitcoin price declines combined with high electricity costs are causing the market to face selling pressure from high-cost miners.

BlockBeats News, December 5 — JPMorgan analysts believe that for Bitcoin’s recent price movements, the resilience of MicroStrategy (stock code MSTR) is more important than miner activity. Although the world’s largest Bitcoin holder has not yet begun selling, Bitcoin miners appear to be under increasing selling pressure. In a report released Wednesday, JPMorgan Managing Director Nikolaos Panigirtzoglou and his team noted that the recent sustained pressure on Bitcoin prices mainly stems from two factors: a recent decline in Bitcoin network hash rate and mining difficulty, and the latest developments surrounding MicroStrategy. The analysts stated that the decline in hash rate and mining difficulty reflects two forces at work: China’s renewed enforcement of its Bitcoin mining ban following a surge in private mining activity, and the exit of high-cost miners outside China due to lower Bitcoin prices and high energy costs squeezing profits. The analysts pointed out that although a drop in hash rate usually boosts miners’ income, “Bitcoin prices are still hovering below their production cost,” which is putting selling pressure on the Bitcoin market. JPMorgan analysts have now revised their estimate of Bitcoin’s production cost down to $90,000, lower than last month’s $94,000. According to the analysts, this update is based on an electricity price assumption of $0.05/kWh; for high-cost producers, every $0.01/kWh increase in electricity price raises their production cost by $18,000. The JPMorgan report stated: “With high electricity prices and lower Bitcoin prices squeezing profits, some high-cost miners have been forced to sell Bitcoin in recent weeks.”