The JPMorgan cost model uses the Cambridge Bitcoin Electricity Consumption Index as a proxy to gauge electricity usage. And importantly, they believe that the decline in the cost was largely driven by the decline in electricity used. In my opinion this is a rather bold proposition. JPMorgan estimates the average per coin production cost dropped from about $20,000 at the beginning of June to the current estimate of $13,000. And it concludes with a look at the recent pivot in the total network hash rate trend, a key component of yield and therefore cost per coin.
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It also presents a more granular way to look at mining costs, especially for the larger U.S and Canada based public mining companies. The article below pushes back, in part, against these conclusions. Related to this last idea, the report cast doubt on the assumption that a meaningful amount of lower efficiency miners have gone offline. The report also attributed the lower production costs to a “strong effort” by the miners to maintain profitability by deploying more efficient mining equipment. The JPMorgan report emphasized that the cost reduction may reduce pressure on miners to sell their Bitcoin holdings. However, Decrypt ran an interesting piece exploring beyond the headline number and spoke with the CEO of mining company CleanSpark ( CLSK ) about the topic. The general reporting seemed to overstress the number itself and its implications for the miners more broadly. This figure was widely reported in the crypto sector and business media. In a mid-July report, JPMorgan ( JPM) estimated Bitcoin ( BTC-USD) miner production costs fell to about $13,000 per coin.