The mining industry under pressure: JPMorgan notes worsening economics of bitcoin mining
The economics of Bitcoin mining continue to deteriorate. JPMorgan analysts estimate the average cost of mining one coin at $78,000. With the current asset prices holding below this mark for five months, approximately 20% of miners are operating at a loss. This is a worrying signal for the entire industry.
The hashrate and network difficulty have become more sensitive to price fluctuations. Over the past six months, the correlation between difficulty and price has risen to 0.62. This means miners are increasingly shutting down equipment during market downturns. In early June, mining difficulty dropped by 10% — one of the sharpest declines in recent years.
Reserve Sell-Off and Market Pressure
Public mining companies are actively selling off their reserves. In the first quarter, they sold over 32,000 BTC to cover operating expenses. For comparison, this exceeds the total sales volume for the entire previous year. Such aggressive liquidation of reserves creates additional pressure on the market.
The pressure on the industry will persist as long as Bitcoin trades below $78,000. However, JPMorgan analysts note that the current pessimism could be a signal for future growth. In June, on-chain data already indicated miner capitulation.
My analysis: The situation resembles a classic market cleansing cycle. Weak players are exiting, while large and efficient companies are likely to survive and strengthen their positions. If Bitcoin does not recover above $78,000 in the coming months, we may see further consolidation in the mining sector.