JPMorgan said in a research paper released on Thursday that Bitcoin (BTC) miners that have access to cheap electrical energy and take advantage of a reliable power combination typically tend to flourish in the increasingly competitive environment.
The research underlines miners’ efforts to find affordable and environmentally friendly power sources to protect their profitability and emphasizes how electrical energy prices are a major factor in mining bills.
A significant factor in the general hash fee’s decline is the cost of electrical energy, particularly in the US, a major hub for Bitcoin mining operations. Lower electrical energy costs should help to temper rising production costs in the current context of a higher hash rate.
The research from JPMorgan underlines the challenges faced by miners.
\The analysis emphasizes the crucial role that energy costs had in the bear market that miners endured over the past year, which contributed to their struggle for survival. While the average cost of electricity per kilowatt hour (kWh) for bitcoin miners throughout the world is $0.05, some larger mining companies have been able to get costs as low as $0.03/kWh. Outstanding Bitcoin miners can maintain profitability even in the face of fierce competition and rising hash rates thanks to these decreased electricity costs, breaking new records.
On the other hand, “weak” miners like Core Scientific, Argo Blockchain, and Iris Vitality have faced significant difficulties as a result of a combination of declining bitcoin prices, increased debt payment costs, and growing electricity costs. According to JPMorgan, only miners with lower manufacturing costs will be able to survive over the long term when the bitcoin mining industry eventually consolidates and becomes more competitive.
Additionally, in order to strengthen their environmental sustainability and respond to growing concerns about environmentally friendly practices, miners have been actively diversifying their power sources through an agreement with renewables.