JPMorgan Reports Fall in Mining Profitability

JPMorgan analysts conducted a study of the current state of cryptocurrency mining and came to the conclusion that this activity has currently lost its former profitability.

Photo: flickr.com by Jorge Franganillo, CC BY 2.0

Experts have noted that the cost of using the computing power required to mine Bitcoin now outweighs its market value.

The basis for these conclusions was an analysis of the so-called “hash rate”. Under current conditions, miners require significant computing resources to select the necessary hash codes needed to obtain bitcoins. The summer drop in the value of bitcoin led to a significant increase in the hash rate, which, in turn, caused an 18% decrease in the cryptocurrency’s market capitalization.

Compared to December 2022, the cost of Bitcoin hashing has fallen by a third. The situation is aggravated by the recent statement of the IMF, which discusses a possible increase in the cost of electricity for miners by 85%. Such measures are aimed at reducing the negative consequences of the energy-intensive mining process. Together, these factors lead to the fact that experts agree: now is an extremely unfavorable time for those who mine Bitcoin.

Clarifications

JPMorgan — an American transnational financial conglomerate, one of the largest banks in the world, with its management center in New York, Manhattan. The Financial Stability Board (FSB) recognized JPMorgan Chase & Co as the most important financial conglomerate in the world, and ranks first in the list of globally systemically important banks in the world. As the largest investment bank in the world and the largest commercial bank in the United States, it is one of the “big four” US banks, along with Bank of America, Citigroup and Wells Fargo. The main areas of activity are investment banking, financial services to individuals and small businesses, commercial banking, financial transactions and asset management. It is one of the largest depository banks and investment banks in the world.

Cryptocurrency — a type of digital currency, the accounting of internal units of account of which is provided by a decentralized payment system (there is no internal or external administrator or any analogue of it), operating in a fully automatic mode.

Mining also mining— the activity of creating new structures (usually new blocks in the blockchain) to ensure the functioning of cryptocurrency platforms. The creation of the next structural unit is usually rewarded with new (issued) units of cryptocurrency and/or commission fees. Mining usually comes down to a series of calculations with enumeration of parameters to find a hash with specified properties. Different cryptocurrencies use different computation models, but they are always long enough to find an acceptable option and fast enough to verify the solution found.

>