Miners at the breaking point: JPMorgan records a critical decline in the bitcoin mining economy
The economic model of Bitcoin mining in 2024 has undergone serious changes, and frankly, for the worse. According to my analysis of data provided by the largest investment banks, the current situation resembles a prolonged squeeze phase that could escalate into a large-scale consolidation of the industry.
The average cost of mining one Bitcoin is currently estimated at $78,000. Meanwhile, the market price of the asset has remained below this level for five months. This means that roughly one in five miners (about 20% of the network) is operating at a loss. Such dynamics are understandably alarming.
Particularly telling is the change in the correlation between network difficulty and the Bitcoin price. Over the past six months, this indicator has risen to 0.62. Previously, difficulty was a relatively inert metric, but now miners are literally "pulling the plug" with every significant price drop. In early June, we already saw a 10% drop in difficulty — direct evidence of widespread equipment shutdowns.
Public mining companies have responded to the pressure by selling off reserves. In the first quarter alone, they sold over 32,000 BTC — more than in all of 2023. This selling activity creates additional pressure on the market, closing a negative cycle.
Until Bitcoin returns above the $78,000 mark, pressure on the industry will persist. However, it is worth noting that it is precisely during moments of maximum pessimism and capitulation that new growth cycles often emerge.
Expert commentary: The current situation is a classic example of a market purge. Those miners who failed to hedge risks or have outdated equipment will be forced to leave the market. However, for large, well-capitalized players, this opens a window of opportunity to acquire assets at bargain prices. It is precisely such periods that typically precede a strong rally.