JPMorgan: Bitcoin hashrate declines due to the departure of inefficient miners

What’s new? The value of bitcoin mining has fallen due to the departure of inefficient industry participants after the April 20 halving, analysts at JPMorgan bank report. After analyzing the actual hashrate and power consumption of the network, they suggested that the cost of mining the coin dropped from $50 000 to $45 000.

Material by CoinDesk

What else is known? JPMorgan expected a significant decrease in hashrate immediately after halving, but it occurred with some delay. The reason for the delay, according to analysts, was the launch of the Runes protocol on April 24, which allows the creation of non-fungible tokens in the bitcoin network. Immediately after the launch, the protocol triggered an increase in fees, providing a temporary increase in miners’ income.

The bank’s analysts noted that thanks to Runes, miners were able to compensate for the loss in the volume of rewards due to halving, keeping the total reward per block including fees almost unchanged. However, Runes is now gradually declining in popularity.

“This highlights the ongoing challenge faced by bitcoin miners to maintain a sustainable source of revenue in particular in the post halving environment,” the bank noted.

With the excitement around Runes subsiding and temporary support for miners dissipating, power consumption on the network has fallen more than hashrate, indicating that unprofitable miners with inefficient rigs are leaving the market, JPMorgan added.

They also emphasized that they see only limited upside potential for the asset in the near term.

At the time of writing, the network’s hashrate is 593,89 EH/s.

Bitcoin miners receive their main income in the form of rewards for mining blocks, with transaction fees making up a smaller part of the revenue. On April 20, the network held its fourth halving of block mining rewards, which halved the reward for mining blocks to 3,125 coins, resulting in the average daily issuance dropping from 900 to 450 coins.

Halving, embedded in Bitcoin’s code, occurs every four years to reduce inflation. It also slows down reaching the asset’s total supply limit, which is programmatically capped at 21 million coins. To date, 19 699 475 BTC have been mined. According to Bitcoin Luxor Mining’s calculations, with halving, the last bitcoin will be mined around the year 2140.