JP Morgan: Bitcoin halving will benefit listed miners

Author: Katherine Ross, Blockworks; Compiler: Deng Tong, Golden Finance

JPMorgan analysts said that publicly traded Bitcoin miners have an advantage during the halving.

In a new report on the halving, analysts say that centralization among Bitcoin miners "is likely to increase" after the April 19 event, but that publicly traded Bitcoin Miners will be the winners.

Analysts led by Nikolaos Panigirtzoglou believe that the Bitcoin network’s hash rate may drop by 20% after the halving due to the departure of inefficient miners. JPMorgan predicts that mining cost range could drop to $42,000.

The team based their calculations on average electricity costs and further noted that some miners may incur different costs based on their location and the size of their mining activity.

The analysts wrote:“Bitcoin miners with below-average electricity costs and more efficient mining machines are likely to survive, while those with higher production costs are likely to Trapped.”

They added that Bitcoin (BTC) price could hover around $42,000 after the April “halving.” Bitcoin is hovering around $60,000 ahead of the halving, hitting a new high not seen since November 2021.

Historically, the price of Bitcoin starts to rise in the following months. However, this momentum often takes time.

In more than a month, the block reward will drop from 6.25 BTC to 3.215, which will also put certain financial pressure on mining companies as rewards decrease and profitability decreases.

It has previously been reported that the industry may see consolidation as miners seek to reduce power costs and increase capital.

JPMorgan analysts agreed, adding that publicly traded miners may be well-positioned after the halving.

There are a number of publicly listed Bitcoin miners. The list includes miners such as Marathon, Riot, CleanSpark, and Hut 8.

Several factors led Panigirtzoglou's team to this conclusion. First and foremost, being a publicly traded miner allows companies to reduce administrative costs, allowing for larger mining operations.

Miners also tend to sign fixed agreements with power companies, “which together with a more sustainable energy structure helps them reduce the cost of electricity, which is Bitcoin A major component of overall production costs."

Finally, "Publicly listed miners have access to the stock market. In fact, they have been raising significant amounts of equity in recent quarters... by purchasing more Efficient mining equipment to power its operations” the analysts wrote.

In 2022, two years after the last halving, the share of publicly traded miners increased as Bitcoin prices fell, making competition among small and private miners more difficult. It's more difficult. Analysts believe this situation may repeat itself.

We expect the share of publicly listed miners to increase after the halving, especially if our prediction of Bitcoin prices falling to $42,000 after April comes true, they said ."