In a recently published analysis, the global investment bank JPMorgan has warned investors of potential price declines in Bitcoin following the halving event in April. Experts at the bank estimate the average production costs for Bitcoin to be around $26,500 per BTC.
According to the bank's analysts, this value is expected to ""mechanically double"" after the halving event to approximately $53,000. However, they also consider the potential impact of increased mining difficulty, which could push smaller miners out of the market.
A scenario that could lead to a 20% decline in mining difficulty compared to initial estimates is assumed by the analysts. This would ultimately also reduce production costs.
The analysts emphasize that such a decline in mining difficulty would bring the hash rate closer to its historical trend and effectively cut the central point of the estimated production cost range to $42,000.
This value of $42,000 is also seen by JPMorgan as the level to which Bitcoin prices could trend after the euphoric enthusiasm for the Bitcoin halving event in April subsides.
JPMorgan's estimates are based on two key assumptions. Firstly, it is assumed that electricity costs for miners will average 5 cents per kilowatt-hour after the halving event, a figure that may vary depending on location and scale. Secondly, it is expected that due to the more energy-intensive nature of Bitcoin mining after April, some private miners with less efficient equipment and limited access to capital will be pushed out of the market.
Such an exodus is expected to lead to a 20% decline in hash rate. JPMorgan had already stated last month that the Bitcoin halving event and the next major upgrade of the Ethereum network are ""largely priced in"".
A recent survey by the investment bank among over 4,000 institutional traders found that 78% of respondents have no plans to trade crypto.
