According to JPMorgan experts, the impending April Bitcoin BTC halving event may cause a significant drop in the cryptocurrency’s price.
According to research released on Wednesday by JPMorgan analysts under the direction of Nikolaos Panigirtzoglou, the halving event would lower Bitcoin miners’ payouts from the current 6.25 BTC per block to 3.125 BTC.
This reduction will hurt miners’ profitability and raise the cost of producing bitcoin. The cost of producing Bitcoin affects its price; analysts estimate that it will be approximately $42,000 after halving.
“The bitcoin production cost has empirically acted as a lower bound for bitcoin prices,” according to the investigators. “The central point of our estimated production cost range stands at $26,500 currently, which would mechanically double post-halving event to $53,000.”
However, the analysts said there is a possibility of a 20% decline in the Bitcoin network’s hash rate post-halving, primarily due to less efficient rigs exiting mining operations due to reduced profitability.
This would consequently lower the central point of the estimated production cost range to $42,000, based on an average electricity cost of 0.05 $/kWh, they added.
“This $42,000 estimate is also the level we envisage bitcoin prices drifting towards once bitcoin-halving-induced euphoria subsides after April,” according to the experts.
The analysts predict that after the halving, Bitcoin miners with lower electricity costs and more energy-efficient equipment would likely make it, while those with higher production costs will probably struggle.
As a result, they stated, the mining sector for Bitcoin is anticipated to become more concentrated after the halving, with a larger portion controlled by miners who are publicly traded since they would lower total costs to maintain profitability.
“There could be also some horizontal integration via mergers and acquisitions among bitcoin miners across regions to take advantage of synergies in their businesses,” the researchers found.
Also Read: Bitcoin’s Rally Beyond $63K Fuels Investor Optimism Pre-Halving
