According to JPMorgan analysts, after the Bitcoin halving scheduled for April, there may be a sharp decline in the price of the cryptocurrency.
The halving will reduce the reward of Bitcoin miners from the current 6.25 BTC per block to 3.125 BTC, and this reduction will negatively affect the profitability of miners and will lead to an increase in the cost of producing Bitcoin. According to the calculations of chief analyst Nikolaos Panigirtzoglou, it will be about $42,000.
The cost of bitcoin production has empirically acted as a lower bound for the price of bitcoin, analysts said.
The center point of the estimated production cost range is currently $26,500, and this figure will automatically double after the halving to $53,000.
In addition, analysts said that after the halving, there is a possibility that the Bitcoin network hashrate will decline by 20%, primarily due to less efficient rigs being taken offline due to decreased profitability. Therefore, this would lower the center point of the estimated production cost range to $42,000, based on an average electricity cost of $0.05 per kWh.
Based on this, it is expected that the concentration of Bitcoin miners will increase and that publicly listed companies will dominate as they are able to reduce overall costs.
