Bitcoin Miners Refute JP Morgan’s $2,400 BTC ‘Break-Even Point’ For Average Cost Of Mining Fees
Miners Do Not Agree With JP Morgan Regarding Bitcoin’s Fair Value Of $2,400
Cryptocurrency miners disagree with JP Morgan regarding the proposed “fair value” for Bitcoin close to $2,400. The bank has released this estimation during a report launched last month. According to the bank, they reached this price taking into account the marginal cost of producing Bitcoin.
According to the report released by the bank, a low-cost Chinese miner could mine Bitcoin for $2,400 per coin during the last quarter of 2018. That means that some miners were acquiring Bitcoin for 40% lower price than in the market.
In a recent report released by the South China Morning Post, miners explain that the concept of an average marginal cost was flawed. For miners, due to the Bitcoin network design, there could be no average “marginal cost” for mining.
Back in April 2018, Citi released a report in which they call for a higher break-even point close to $5,500. However, at that time, Bitcoin was traded close to $6,800. After November 2018, Bitcoin dropped under $6,000 and reached $3,250 in December.
Ben Gagnon, the co-founder of LuTech, a Bitcoin mining hardware developer, mentioned:
“There could be no average cost, or break-even point, for the entire market, because the way the Bitcoin blockchain functions mean that there will always be miners seeking to create blocks and get Bitcoin rewards so long as they can operate with power-efficient hardware at low electricity cost.”
As the price of Bitcoin falls, the cost of mining the most popular virtual currency falls as well. Miners that have the most expensive operations will be those leaving the market first. There is room for more market share and profitability for low-cost miners.
LuTech’s mining cost has been close to $1,400. In Tel Aviv, Bitfarms Technologies reported that their mining cost was $1,567.
There are several industry leaders that believe that Bitcoin will start a new rally as soon as 2020. The main reason behind this growth is related to its halving. Block rewards for miners will decrease from 12.5 BTC down to 6.25 BTC. This would reduce Bitcoin’s inflation and help the market start a new bull run if demand increases. At the moment, each BTC can be purchased for $3,991 and it has a market capitalization of $70 billion.