JPMorgan: Bitcoin (BTC) halving could be a stress test for miners
Date: 2023-07-15 Author: Karina Ziganova Categories: BLOCKCHAIN, BUSINESS
Banking giant JPMorgan believes that the upcoming Bitcoin (BTC) halving will be a crucial test for miners, as they will have to face lower rewards and increased production costs.
"Miners with lower electricity costs will find it easier to cope with halving, while miners with higher electricity costs may face difficulties," JPMorgan strategists said.
In their opinion, halving will determine the ability of miners to adapt and remain profitable in a changing environment. And, although halving has a positive effect on the price of BTC, it creates problems for miners, since the cost of mining has historically acted as the minimum price.
"A change in the cost of electricity by one cent per kWh leads to a change in the cost of bitcoin mining by $4300. After halving, this sensitivity will double to $8600," analysts say.
Competition is intensifying
Competition among miners also intensifies in the run-up to halving, as the BTC hash rate, or total computing power for cryptocurrency mining, increases.
However, after the halving, Bitcoin's hash rate may not continue to rise at the same rate without any sustained rise in the price of BTC above cost or a significant increase in transaction fees. They can compensate for the reduction in release rewards.
How to make money on halving
Earlier, the Plan B analyst presented a new trading strategy to readers. In his opinion, it can bring a profit that significantly exceeds the profit from the simple purchase and storage of coins. The new trading strategy of the creator of the Stock-to-Flow model is built around halving.
The essence of the strategy is to use the cyclical behavior of bitcoin. This includes a sharp rise in prices, often seen during the halving period, which is then replaced by a bear market. The Plan B strategy makes it possible to take advantage of the price increase and exit the trade before the BTC quotes fall. However, the Stock-to-Flow rule is not a predictive model. Rather, it is a strategy that uses certain buying and selling rules.
