JPMorgan Predicts 20% Bitcoin Hash Rate Decline by April 2024

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JPMorgan recently published a report, and in it, they’re saying that there might be a 20% drop in the power of the Bitcoin network after the next Bitcoin halving in April 2024. This report is their way of making a prediction about what could happen.

According to their report, JPMorgan believes that when the next Bitcoin halving happens in April 2024, about 20% of the network’s hash rate, which is like its computing power, might decrease by up to 80 exahashes per second. This decrease is expected because older and less efficient mining equipment might be taken out of use.

Expected Substantial Decline in Bitcoin’s Hash Rate

The research report talks about how the Bitcoin mining industry is facing a critical moment as it gets closer to the Bitcoin halving in April 2024. This halving happens every four years and cuts in half the rewards for Bitcoin miners, which is done to control inflation. This upcoming halving is the fourth one, set for April 2024.

The report mentions that over the four years between halvings, the total reward for mining new Bitcoin blocks is roughly $20 billion, based on Bitcoin’s current price. But, this is a significant drop of about 72% from a little over two years ago when it was around $73 billion in April 2021. In the past year, it has been fluctuating between $14 billion and $25 billion.

As of the time the report was published, the price of Bitcoin is $26,778.

In their list of Bitcoin mining companies, JPMorgan singles out CleanSpark as their favorite choice. They think CleanSpark strikes the best balance when it comes to its size, potential for growth, energy costs, and value compared to others.

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However, they also point out that Marathon Digital, which is the largest of these companies, has the highest energy expenses and the least profit margin.

Predictions About Bitcoin Mining Before the Halving

Marathon Digital shares some operational details on its website, though they acknowledge that these are rough estimates. They claim to have around 155,910 active miners worldwide.

Marathon Digital Operations Summary. Source: Marathon Digital

They also believe that Riot Platforms has reasonably low costs for power and good liquidity. They don’t think the four-year cycles in Bitcoin are necessarily tied to the halvings, which is a common belief.

On the other hand, there are differing opinions online. A Bitcoin enthusiast called ‘Pledditor’ questions whether Bitcoin’s four-year cycles are more like coincidences and have less to do with the halving events.

Despite the debate, the upcoming halving is exciting for Bitcoin mining companies. Blockstream, a Bitcoin infrastructure company, is buying Bitcoin mining equipment, expecting the value of these assets to increase after April 2024.

Important: Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.

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