Big Picture: As the cryptocurrency crash continues to drive Bitcoin prices down from where they were a year ago, the domino effects are still showing up in various areas. One of them is the cost of production, and the efforts of miners to control it can be a double-edged sword for the crypto market.
JPMorgan Chase & Co. reports that since the beginning of June, the cost of bitcoin mining has fallen to around $13,000 from $24,000. Bloomberg notes that a drop this is most likely an effect of the crypto winter, but it is not clear if this can help or hinder the recovery of the cryptocurrency price.
This decline is easily attributed to the exodus of miners after the price of bitcoin fell from its high in November last year, which could lead to a decrease in the amount of electricity and computing power needed for mining. Summer heat can also encourage some pauses in mining. However, JPMorgan strategists led by Nikolaos Panigirtzoglou argue that this is actually because miners are protecting profitability with more efficient rigs.
On the one hand, lowering mining costs to make bitcoin more profitable could stabilize the market. On the other hand, some believe that the cost of production is the floor price of Bitcoin during recessions. Lowering this threshold could make the crypto winter even worse.
Bitcoin hit its peak of nearly $70,000 last November. tanking this spring. The downturn has sent various organizations into shock, such as cryptocurrency companies, the Salvadoran government, North Korea’s weapons program, and extortionist gangs.
Credit: www.techspot.com /