Bitcoin Selling By Miners Could Continue into Q3 if BTC’s Price Does Not Improve – JP Morgan


Summary:

  • Bitcoin miners needing to sell could weigh down on the price of BTC for some time.
  • According to analysts from JP Morgan, miners offloading Bitcoin to cover costs could continue into the third quarter of 2022 if the value of BTC does not improve.
  • However, selling pressure could reduce, given Bitcoin production costs have dropped from $18k – $20k to $15k due to new machines being energy efficient.

Bitcoin miners needing to sell their coins could continue to weigh down the price of BTC for some time.

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According to JP Morgan analysts, public-listed miners have already reported Bitcoin sales in May and June to increase their liquidity, meet production costs, and possible deleverage. The same public-listed miners make up 20% of the total Bitcoin miners.

Bitcoin Selling by Miners Could Continue into Q3 if BTC Prices Do Not Improve.

At the same time, the analysts from JP Morgan forecasted that privately-held Bitcoin miners could have sold a considerable chunk of their BTC holdings to meet ongoing costs. Furthermore, selling by all Bitcoin miners could roll into Q3 if BTC’s value did not improve. They explained:

Offloading of Bitcoins by miners, in order to meet ongoing costs or to delever, could continue into Q3 if their profitability fails to improve.

That offloading has likely already weighed on prices in May and June, though there is a risk that this pressure could continue.

Bitcoin’s Production Has Dropped to $15k.

On the bright side, the JP Morgan analysts pointed out that Bitcoin’s production costs had dropped from an average range of between $18k and $20k to a lower level of $15k. The drop is the result of improved energy efficiency in mining hardware and could assist in maintaining profitability for the miners.

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To note is that the production costs of more extensive mining facilities are as low as $8k, which means that some Bitcoin miners are still earning comfortable profits.

Over $4B in Bitcoin Mining Loans are Coming Under Stress.

In another analysis, the team at Bloomberg had pointed out that the ongoing crypto market drawdown is exerting stress on $4 billion worth of loans taken by BTC miners and backed by their equipment. The report explained that ‘a growing number of loans are now underwater’ and a ‘few miners have defaulted on their loans so far.’


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