In a recent Investigation report From JPMorgan, the financial firm has predicted a sharp drop for a bitcoin metric, predicting a possible fall of the bitcoin network hash rate by 20% ahead of bitcoin‘s halving in April 2024.
JPMorgan expects bitcoin hash rate to fall
In the report, JPMorgan stated that the bitcoin mining industry is at a crucial stage leading up to the bitcoin halving in April 2024 and beyond. This is because the approval of a bitcoin-spot-etf-next-step-sec-approval/” rel=”nofollow”>btc Spot Exchange Traded Fund (ETF) could spark a rally against the backdrop of record hash rates and the impending block reward halving that threatens industry revenue and profitability.
The report highlighted that the total four-year block reward opportunity is estimated at $20 billion, due to the current bitcoin (btc) pricewhich is 72% below its all-time high in 2021. This figure represents a significant drop from its peak of $73 billion in April 2021 and has fluctuated between $14 billion and $25 billion since last year.
As such, the financial firm expects the bitcoin mining sector to see the expected 20% drop in hash rate at the next bitcoin halving in April 2024.
“We estimate that up to 80 EH/s (or 20% of the network hash rate) could be removed in the next halving (April 24) as less efficient hardware is decommissioned,” it reads. in the report.
Halving bitcoin is an event that aims to control inflation and involves cutting bitcoin miners’ rewards in half, and takes place approximately every four years after miners solve 210,000 blocks.
<img decoding="async" class="aligncenter size-medium" src="https://technicalterrence.com/wp-content/uploads/2023/10/US-megabank-JPMorgan-predicts-sharp-drop-in-this-Bitcoin-metric" alt="Tradingview.com bitcoin Price Chart (JP Morgan btc Hash Rate)” width=”2804″ height=”1746″ loading=”lazy”/>
btc price still holding $26,800 | Source: BTCUSD on Tradingview.com
Analysts Reginald Smith and Charles Pearce noted in the report that the bank favors mining operators that can offer the best relative value in light of the existing hash rate, operational efficiency, power contracts, and more.
JPMorgan chose bitcoin mining company bitcoin-mining-continues-to-expand/” rel=”nofollow”>Clean Spark (CLSK) as its first choice among several companies listed by the company, highlighting that the mining company offers the best balance of scale, growth potential, energy costs and relative value.
In addition, the firm highlighted the importance of other mining companies that it lists. These include bitcoin-mining-marathon-reports-228-revenue-boost/” rel=”nofollow”>Digital Marathon (MARA), Riot platforms (RIOT)and crypto mining (CIFR).
According to the firm, Marathon Digital is the largest mining operator, with the highest energy costs and the lowest margins. Meanwhile, Riot has lower energy and liquidity costs, but Cipher has the lowest energy costs with limited growth.
The firm also included in the report a rating table of mining operators’ weights and price targets.
The height bitcoin-how-to-save-costs-on-electricity-if-you-are-mining/” rel=”nofollow”>mining cost and the removal of inefficient hardware have been considered some of the factors that tend to affect the bitcoin mining industry.
Large amounts of electricity are needed for mining and initially this makes it too expensive for miners to continue operating. However, many also tend to return whenever the next bull cycle takes the price of bitcoin to unprecedented levels.
Featured image from Shutterstock, chart from Tradingview.com
