JPMorgan: Bitcoin price declines combined with high electricity costs are causing the market to face selling pressure from high-cost miners.

On December 5, JPMorgan analysts stated that for Bitcoin’s recent price trends, the resilience of MicroStrategy (stock code MSTR) is more important than miner activity. Although the world’s largest Bitcoin holder has not yet started selling, Bitcoin miners appear to be facing increasing selling pressure. Nikolaos Panigirtzoglou, Managing Director at JPMorgan, and his team pointed out in a report on Wednesday that the continued pressure on Bitcoin’s price recently is mainly due to two factors: the recent decline in Bitcoin network hashrate and mining difficulty, and the latest developments surrounding MicroStrategy. The analysts noted that the drop in hashrate and mining difficulty reflects two forces at play: China’s reaffirmation of its ban on Bitcoin mining after a surge in private mining activity, and high-cost miners outside China exiting the market due to falling Bitcoin prices and high energy costs squeezing profits. The analysts stated that while a drop in hashrate usually increases miner revenue, “Bitcoin’s price is currently still lingering below its production cost,” which has brought selling pressure to the Bitcoin market. JPMorgan analysts have now revised their estimate for Bitcoin’s production cost down to $90,000, lower than last month’s $94,000. According to the analysts, this update is based on an assumed electricity price of $0.05/kWh; for high-cost producers, every $0.01/kWh increase in electricity price will raise production costs by $18,000. The JPMorgan report stated: “Amid high electricity prices and lower Bitcoin prices squeezing profits, some high-cost miners have been forced to sell Bitcoin in recent weeks.”