Bitcoin mining network becoming more sensitive to price swings, JPMorgan says
Key takeaways
- The bank estimated more miners are operating near breakeven as bitcoin trades below its production cost.
- The bank said bitcoin's hashrate and mining difficulty have become noticeably more responsive to changes in the cryptocurrency's price this year.
- "Mining economics have worsened this year with the bitcoin price staying well below its production cost for five months in a row," analysts led by Nikolaos Panigirtzoglou said in the report last week.
The bank estimated more miners are operating near breakeven as bitcoin trades below its production cost. Larger and more frequent difficulty adjustments are likely if bitcoin remains under its estimated $78,000 production cost.Bitcoin's mining network is becoming increasingly sensitive to price movements as more miners operate near breakeven levels, according to Wall Street bank JPMorgan.
The bank said bitcoin's hashrate and mining difficulty have become noticeably more responsive to changes in the cryptocurrency's price this year. Over the past six months, the beta of mining difficulty relative to BTC price moves has climbed to 0.62, a sign that the network's computing power is reacting more quickly to market conditions.
"Mining economics have worsened this year with the bitcoin price staying well below its production cost for five months in a row," analysts led by Nikolaos Panigirtzoglou said in the report last week.