JPMorgan Sees Bitcoin at $85,000: What Could Ease Selling Pressure?
According to JPMorgan, Bitcoin staying above its estimated production cost of around $85,000 could reduce the risk of forced sales by miners. However, the price has fallen back below the threshold it crossed during its rally earlier this week.
According to The Block, JPMorgan analysts led by Nikolaos Panigirtzoglou said in a report on Wednesday that Bitcoin had spent 280 days below its estimated average production cost before this week’s rally. The bank’s comparison for similar conditions in 2018 was about 224 days.
Although Bitcoin crossed the cost threshold during this week’s rally, it was trading at around $84,100 when The Block’s report was prepared. The relief analysts anticipate for miners therefore depends on the price staying above the threshold; it is not being presented as an actual and lasting reduction in selling pressure.
Why does $85,000 matter?
JPMorgan’s level of around $85,000 represents the estimated average cost of producing one Bitcoin. This does not mean that all miners operate at the same cost or that Bitcoin cannot fall below this level. The analysts say production cost has historically served as a flexible support for the price.
When the price stays below cost for an extended period, miners with high electricity and equipment expenses can operate at a loss. These companies may sell more Bitcoin to cover expenses, shut down their machines, or exit the market. According to the bank, the price staying above cost could ease the risk of forced sales.
How have miners responded to the pressure?
According to the report, during the prolonged period of low profitability, miners moved their machines to regions with cheaper electricity, sold older equipment, and mothballed some of their machines. Some less efficient machines were scrapped or recycled.
The exit of high-cost miners also affects the network’s total computing power, or hash rate, as well as mining difficulty. JPMorgan said the network’s computing power had fallen about 19% from its peak last October, while mining difficulty had dropped about 15%.
AI is changing mining economics
According to the analysts, some miners are reallocating part or all of their capacity to AI computing. The high prices AI companies pay for electricity and ready-to-use data center infrastructure can provide more stable and predictable revenue per megawatt. This shift is leading many publicly traded miners to lower their hash rate growth expectations.
JPMorgan also says that publicly traded companies’ share of mining activity is declining in favor of private companies and state-linked miners. According to the bank, the shift toward AI could slow the growth of computing power on the Bitcoin network, contributing to slower increases in production costs outside halving periods.