During the September rally, Bitcoin surpassed the $85,000 mark, which JPMorgan analysts identify as the average production cost for one BTC. This milestone was reached for the first time in 280 days. Experts suggest that maintaining a price above this threshold reduces pressure on miners and mitigates the risk of forced asset liquidations.
JPMorgan defines the estimated production cost as a soft floor for Bitcoin prices. When market values drop below this level, miners with high electricity and equipment costs face potential losses, leading to equipment shutdowns or market exits. A similar scenario occurred in 2018, when Bitcoin remained below the estimated cost for approximately 224 days.
In June, JPMorgan estimated the average production cost per BTC at approximately $78,000, while the market price hovered around $62,500. At that time, CoinShares reported that roughly 20% of miners were operating at a loss. By the second quarter, the industry as a whole fell below the break-even point.
A significant trend involves miners shifting infrastructure toward AI projects. JPMorgan notes that Bitcoin's hashrate has declined by approximately 19% from its October peak, while mining difficulty has dropped by about 15%. Public miners are increasingly signing long-term AI contracts, which offer more predictable revenue per megawatt compared to Bitcoin mining.
This strategic pivot is expected to slow the growth of the network hashrate and, consequently, the growth of production costs outside of halving periods. In the first half of the year, public mining companies reduced their realized hashrate by 56 EH/s, or 15%, with the majority of these resources being reallocated to support AI infrastructure development.
