Drop It Like It’s Hot
Market Meditations | July 15, 2022
- Due to the decline in electricity use, analysts have determined that the production cost for bitcoin has dropped to $13,000. June estimated production costs were at $20,000.
- A recent report released by the firm stated that miners are attempting to protect profitability by exploring more efficient rigs, instead of deploying just any miner available.
- To estimate production cost, JP Morgan treats bitcoin as a commodity, basing it on the marginal cost of production. Daily price data, as well as hash rate & difficulty from bitinfocharts.com, are used to estimate the marginal cost production.
- The Cambridge Centre for Alternative Finance’s estimates for electricity consumption in the CBECI and the hash rate are used to infer an implied efficiency estimate of mining hardware.
- During a bear market, some consider the production cost of bitcoin as the lower bound of the price range.
Those of us waiting for a turnaround in the BTC price may be left waiting, especially after the CPI data from this week.