Global investment bank JPMorgan has analyzed that miners’ selling pressure could ease significantly if Bitcoin continues to trade above the expected production-cost level of $85,000. Before the recent surge, Bitcoin had remained below the average cost of production for mining for about 280 days.
A research team led by JPMorgan analyst Nikolaos Panigirtzoglou said in a report that Bitcoin’s production cost has historically served as a gradual price floor. When Bitcoin remains below production costs for an extended period, miners with high electricity bills and equipment-procurement costs inevitably face a sharp deterioration in profitability. As a result, miners come under pressure to sell large amounts of their holdings on the market, shut down equipment, or exit the market.
Mining companies have reportedly responded to prolonged declines in profitability by relocating mining machines to areas with cheaper electricity, selling older equipment, and adjusting operating rates. In addition, some have redirected computing capacity to artificial intelligence, while the network’s total computing power and mining difficulty at times recorded double-digit declines from their peaks.
Experts expect that if Bitcoin remains stably above $85,000, miners in marginal conditions could gain breathing room and the risk of forced asset sales could fall substantially. They assess that a similar adjustment phase may be emerging to the one seen during the 2018 bear market, when Bitcoin remained below production costs for about 224 days before restructuring among high-cost miners helped restore supply-demand stability.