JPMorgan Says Bitcoin Above $85,000 Production Cost Could Ease Miner Selling

Bitcoin has risen above JPMorgan’s estimated production cost of around $85,000 after spending 280 days below it. Analysts led by Nikolaos Panigirtzoglou said that if the move holds, miners could get relief and face less risk of forced selling. Bitcoin has since slipped slightly and trades near $84,100. The analysts added that the rally, despite the US Senate’s failure to advance the Clarity Act, fits with investors closing bearish positions.

Why Production Cost Acts as a Soft Floor

The analysts say production cost has historically worked as a soft floor for bitcoin’s price. When the price stays below it for long, miners with higher electricity and equipment costs turn unprofitable and may sell more coins, shut down machines or leave the market.

During this stretch, miners coped by moving rigs to cheaper power, selling older machines, putting some equipment on standby and scrapping less efficient units. The last comparable period was in 2018, when bitcoin stayed below the level for about 224 days. The industry is bigger and more industrial now, but the same adjustment still applies.

Bitcoin Miners Shift Toward AI and Hash Rate Falls

Miners are also moving toward AI computing, which has slowed hash rate growth. Hash rate is down about 19% from last October’s peak, and mining difficulty has fallen roughly 15%. AI companies pay solid premiums for power and data centers, and that income is steadier and higher per megawatt than mining. Many listed miners have cut their hash rate growth forecasts.

Private and Sovereign Miners Gain Share

Publicly listed miners are losing ground to private and sovereign miners. The analysts say this could keep the network from becoming too crowded and lower concentration risk. It also means production cost should rise more slowly, outside halving events.