JPMorgan Finds Cost of Mining Bitcoin Fell to $13,000

The cost of producing a bitcoin fell nearly 50 percent over the last month to a total of $13,000, JPMorgan analysts said Wednesday.

The cost of producing a bitcoin was $24,000 at the beginning of June, analysts said. They explained the declining cost of production had been “driven almost entirely by the decline in electricity use.”

Electrical usage has surged in the United States over the summer due to heightened temperatures. Bitcoin-miner Riot Blockchain temporarily shuttered its mining facility in Texas on Monday — for the second time in a month — as part of an effort to conserve energy in the region. Riot’s facility in that state is the largest bitcoin-mining operation in North America.

JPMorgan researchers pointed out that the diminished costs gave miners less incentive to wait for better prices before selling their coins.

“While clearly helping miners’ profitability and potentially reducing pressures on miners to sell Bitcoin holdings to raise liquidity or for deleveraging, the decline in the production cost might be perceived as negative for the Bitcoin price outlook going forward,” analysts wrote. “The production cost is perceived by some market participants as the lower bound of the Bitcoin’s price range in a bear market.”

The estimate did not include the cost of depreciation or other overhead costs. For large mining companies, those added numbers are likely to add several thousand dollars to bitcoin’s per-unit price.

Bitcoin began June at a price of about $29,800, ending the month at around $19,300. It reached a monthly low of $17,600 on June 17 before bouncing back to nearly $21,000 as of Thursday. Bitcoin and global markets more broadly will face their next big challenge on July 27, when the Federal Reserve is expected to raise the interest rate by as much as 1 percent.