JPMorgan: Bitcoin breaking through $85,000 may alleviate selling pressure from miners

A team led by JPMorgan analyst Nikolaos Panigirtzoglou released a report on Wednesday stating that Bitcoin recently surpassed the estimated production cost of approximately $85,000. The report noted that Bitcoin had been below this estimated average production cost for 280 consecutive days before breaking above it during this week's rebound, briefly trading above it before slightly retreating, at around $84,100.

The analysts indicated that historically, production costs have acted as a soft floor for Bitcoin prices. When prices remain below this level for an extended period, miners with high electricity and equipment costs may become unprofitable. The last time Bitcoin was below the estimated production cost for a similar duration was in 2018, lasting about 224 days, during which the price drop prompted high-cost miners to shut down, leading to a decrease in Bitcoin network hash rate and mining difficulty.

The analysts stated that the mining industry today is larger and more industrialized than in 2018, but the same adjustment mechanism still applies, namely the exit of high-cost miners. If this new situation can be maintained, it should provide relief for Bitcoin miners, thereby reducing their risk of being forced to sell.