Powering the Future: Only Bitcoin Miners with Low Electricity Costs and Sustainable Energy Mix to Thrive, JPMorgan Report Reveals

• JPMorgan’s report posits that Bitcoin miners can thrive only if they have low electricity costs and a high sustainable energy mix.
• The past year’s bear market has shown the critical role of power costs, with miners striving to find cheaper and sustainable energy sources to safeguard their profitability.

In an increasingly competitive cryptocurrency arena, Bitcoin miners can secure their place only by leveraging low-cost electricity and a high mix of sustainable energy, according to a research report released by JPMorgan on Thursday. The primary expenditure for miners is electricity, which significantly impacts Bitcoin production costs, and the pursuit of inexpensive, renewable energy sources has become essential to maintain profitability.

Bitcoin miners globally have been impacted by fluctuating electricity prices, which have been gradually declining, particularly in the U.S., the home base for a majority of Bitcoin mining companies. The U.S., being the largest contributor to the Bitcoin hashrate, plays a significant role in the collective computational power used to mine and process transactions on Bitcoin’s proof-of-work blockchain.

According to the analysis led by Nikolaos Panigirtzoglou,

“Lower electricity costs should help contain the rise in Bitcoin production costs amidst the current phase of escalating hashrate.”

The previous year’s bear market has brought into sharp focus the pivotal role of power costs, with miners battling to stay afloat.

Global average electricity price for Bitcoin miners stands at approximately $0.05 per kilowatt hour (kWh). Nevertheless, certain sizable mining enterprises have managed to secure rates as low as $0.03/kWh. Such reduced electricity costs enable large Bitcoin miners to suppress Bitcoin production costs, thereby maintaining their profitability even under intense competition and record-breaking hashrate levels.

Miners labeled as “vulnerable” by the analysts, such as Core Scientific (CORZQ), Argo Blockchain (ARB), and Iris Energy (IREN), have faced survival challenges due to a confluence of factors: declining Bitcoin prices, increasing debt service costs, and rising electricity costs. The report suggests that miners with higher electricity costs have incurred losses due to the drop in Bitcoin prices over the past year.

JPMorgan anticipates that the Bitcoin mining industry will consolidate over time, becoming more competitive as only miners with lower production costs survive. In line with global sustainability goals, miners have also been endeavouring to diversify their power mix with renewable energy sources, striving to transform their operations to be more environmentally responsible.