The upcoming halving event in April is expected to reduce the reward for Bitcoin miners from the current 6.25 BTC per block to 3.125 BTC. Analyst Nikolaos Panigirtzoglou from JPMorgan Chase warned in a report on Wednesday that this reduction in output will have a negative impact on miners’ profitability, leading to an increase in the cost of Bitcoin production and subsequently affecting the market price of Bitcoin. The analyst predicts that the price of Bitcoin will drop to $42,000 after the halving.
In the report, the analyst also noted that due to the decrease in profitability and lower efficiency, less efficient mining machines may exit the mining business. This could result in a 20% decline in the computing power of the Bitcoin network after the halving, further reducing the estimated cost of production from $53,000 to $42,000 (based on an average electricity cost of $0.05 per kilowatt-hour). The analyst stated:
On the other hand, the analyst also expressed concerns about the concentration of mining power in the Bitcoin network after the halving. The analyst mentioned that after the halving, publicly listed Bitcoin miners are likely to occupy a higher market share as they lower overall costs to protect profitability. Furthermore, there may also be horizontal integration among Bitcoin miners in different regions through mergers and acquisitions to leverage synergies in their operations.
