Attention has been drawn to recent modifications made by JPMorgan to their estimation of Bitcoin’s production costs. JPMorgan’s revised Bitcoin production cost, which was previously estimated at $21,000, is now $18,000.
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The decision to change the methodology of the Cambridge Bitcoin Electricity Consumption Index (CBECI), which is intimately related to this action, emphasizes how tightly financial analysis and industry indicators are intertwined. In particular, the CBECI is well known for playing a crucial role in monitoring and measuring the amount of electricity used by the Bitcoin network.
Revised CBECI Methodology’s Impact On Mining Costs
The new technique alters the landscape of Bitcoin’s production cost estimates, as JPMorgan analysts working under Nikolaos Panigirtzoglou stated in recent research. The investigation found:
Miners going to pump tomorrow!
JPMorgan recently revised its estimation of Bitcoin production costs from $21,000 to $18,000, influenced by changes in the Cambridge Bitcoin Electricity Consumption Index (CBECI) methodology.
The updated CBECI methodology reduces sensitivity to… pic.twitter.com/UH2LwvYcDx
— InvestAnswers (@invest_answers) September 8, 2023
With the new process, the cost of producing one bitcoin today has been reduced from $21,000 to roughly $18,000.
This move, infers the researcher, suggests that future variations in power prices will have a relatively smaller impact on mining costs.
The effects of the CBECI’s changes go beyond merely altering estimates. Changes in the price of power have been found by analysts to dramatically lower the cost of creating one bitcoin.
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This sensitivity has marginally decreased to around $3,800 with the revised CBECI approach, down from the prior $4,300 change for every cent per kWh (kilowatt hour).
Bitcoin Latest Price Action
The current state of Bitcoin is still pretty negative. Bitcoin hasn’t changed significantly since it fell 13% in the previous month, dropping below $29,000, other than to continue on a downward trajectory. BTC has made some advances, though, over the last day.
— ImNotTheWolf (@ImNotTheWolf) July 20, 2022
At the time of writing, the top cryptocurrency is trading for $25,902, up about 1% from the previous day. The market value of the asset has dropped by more than $70 billion in the last month.
From a high of $14 billion last Wednesday to as low as $3.5 billion yesterday and $8 billion over the previous 24 hours, Bitcoin’s trading volume has decreased significantly.