Survival of Bitcoin Miners Hinges on Low Power Costs and Sustainable Energy Sources, JPMorgan Warns – Coinpedia Fintech News
In a research report released on Thursday, JPMorgan stated that Bitcoin (BTC) miners who have access to inexpensive electricity and utilize a sustainable energy mix are more likely to thrive in the increasingly competitive landscape.
The report emphasizes that electricity costs are a key factor in mining expenses and highlights miners’ efforts to find cost-effective and environmentally friendly energy sources to safeguard their profitability.
Notably, electricity prices have been declining, particularly in the United States, which is a major hub for Bitcoin mining operations and contributes significantly to the overall hash rate. Lower electricity costs are expected to help mitigate the rising production expenses amid the current phase of heightened hash rate.
JPMorgan’s report highlights difficulties faced by miners
The report underlines the crucial role of power costs in the bear market experienced by miners in the past year, leading to their struggle for survival. While the average global electricity price for bitcoin miners stands at around $0.05 per kilowatt hour (kWh), some larger mining firms have managed to secure rates as low as $0.03/kWh. These reduced electricity expenses enable prominent Bitcoin miners to maintain profitability even in the face of intense competition and surging hash rates, setting new records.
Conversely, “vulnerable” miners, including Core Scientific, Argo Blockchain, and Iris Energy, have faced significant challenges due to a combination of falling bitcoin prices, increasing debt servicing costs, and rising electricity expenses. JPMorgan predicts that the bitcoin mining industry will eventually consolidate and become more competitive, with only miners boasting lower production costs able to survive in the long run.
Furthermore, miners have been actively diversifying their energy sources with a focus on renewables to enhance their environmental sustainability and align with growing concerns about eco-friendly practices.
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