Monday, March 30, 2020

JP Morgan Believes Bitcoin Is Worth Less its Mining Cost

BTCNN
BTCNN
BTCNN aim to be the key source for both digital currency experts and newbies. With the cryptocurrency industry growing so fast we want to educate our readers about all the latest developments as they happen.
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According to JP Morgan, an investment bank and financial services company based in New York, the cost of mining Bitcoin is higher than its price. However, the loss in mining operations may only be experienced by high-scale miners since those on a small scale spend less to produce this digital asset, reports Bloomberg on January 25.

Bitcoin’s Mining Cost Exceeds its Actual Price

Based on reports, JP Morgan stated that the cost of mining Bitcoin exceeds its actual price. As at press time, Bitcoin was trading at around $3,587 while the financial services company said the cost of mining 1 Bitcoin is $4060. According to the bank, it may result in losses for large scale miners in China whereas, small scale miners who pay around $2040 may still count profits.

JP Morgan also said:

The drop in Bitcoin prices from around $6,500 throughout much of October to below $4,000 now has increasingly pushed margins further and further negative for just about every region except low-cost Chinese miners

Electricity Adds the Biggest Cost For Miners

Furthermore, electricity is reportedly the component that adds the biggest costs for miners. This is because it runs these high-powered computer rigs that mine Bitcoin in order to obtain a reward. JP Morgan also outlined that Bitcoin’s dump in price from $6,500 in October to less than $4,000 has been less impactful on low-cost Chinese miners.

In their own words, these falling rate has “pushed margins further and further negative for just about every region except low-cost Chinese miners.”. As a result, this will force high-cost producers of the virtual asset to drop out even though it has not happened yet, the company said.

JP Morgan Says Bitcoin’s Use for Payments Will Remain Challenge

BTCNN on January 25 reported of JP Morgan’s opinion that Bitcoin will remain challenged as a means of payment. The firm also added that financial institutions over the past six months have invested less in the crypto market. This decline was attributed to Bitcoin’s dump in price and the ease at which the virtual currency can be used to carry out illegal operations.

Despite these views, Jeremy Allaire, Circle’s CEO has a contrary notion which was stated in World Economic Forum at Davos, Switzerland on January 23. The opinion of the CEO is that cryptocurrency will be more transformative than the internet. He also said the society will need crypto to survive the digital age, given that this technology is a tamperproof, resilient, and decentralized infrastructure.

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