The analysts at JP Morgan are poking pot shots at Bitcoin (BTC) again, this time around a report from the wall street giant states that during the fourth quarter of 2018, the market price of BTC was lower than its mining costs on average for over four weeks.
Just a few days earlier, JP Morgan’s analyst predicted that BTC could fall below $1,260, a report by the team states that the expense of mining bitcoin during Q4 was averaging about $4,060 around the world. As reported by Bloomberg, the firm suggests that when the price of bitcoin went below $4,000, starting late November, bitcoin mining became uneconomical.
BTC is currently trading at around the $3,650 level (at the time of writing), after falling off the $3,700 resistance level which it touched earlier.
The report notes that BTC miners in China are kind of an exception, as they incur relatively lower mining costs. On average, Chinese miners spent approximately $2,400 to mine one bitcoin:
The drop in Bitcoin prices from around $6,500 throughout much of October to below $4,000 now has increasingly pushed margins further and further negative for just about every region except low-cost Chinese miners.
The reason behind the low costing is because Chinese miners directly buy electricity from power generators with excess production. The analysts went on to estimate that if only Chinese miners remained in the ecosystem, that BTC’s marginal mining cost would go below $1,260.
Scenarios, where BTC miners are making an exist, has been observed all over the world. In fact, research conducted in Q4 2018, inferred that almost 100,000 BTC miners have been shutting down as Bitcoin prices are plunging.
Though the exists aren’t a piece of good news, the remaining miners could reap the benefits, as it lowers the hash rate, the computing power required to mine BTC. The lowering of hash rate enables the remaining miners to mine more BTC without raising energy consumption.
However, the analysts add that such a scenario is yet to arise. This is because, the number of miners based in low-cost regions such as the Czech Republic, Iceland, and the U.S. has observed growth.
Read more: EOS Scores First Position In Chinese Blockchain Rankings Again, Ethereum Stands 2nd & Bitcoin 15th
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