As competition between miners intensifies, the Bitcoin (BTC) hashrate has reached a new all-time high, according to a research report from JPMorgan (JPM) released Thursday. The upcoming halving event, expected in the second quarter of 2024, will reduce issuance rewards from 6.25 BTC to 3.125 BTC, “implying a reduction in miners’ revenues, effectively increasing Bitcoin’s production cost at the same time,” the report said.
Hashrate is the total combined computational power used to mine and process transactions on a proof-of-work blockchain such as Bitcoin. JPMorgan analysts believe miners with lower electricity costs will be better equipped to survive the halving, while those with higher power costs may struggle. The bank estimates that a 1 cent per kilowatt hour (kWh) change in the electricity cost could cause a $4,300 change in the Bitcoin production cost. After halving, this sensitivity would double to $8,600.
The steep rise in the hashrate indicates that more mining rigs are being deployed, the note said. However, it is unlikely the hashrate will continue to rise at the same pace following the halving event “without any sustained rise in the Bitcoin price above its production cost or a large increase in transaction fees that could offset the reduction in issuance rewards,” the report added.