JPMorgan has released a report forecasting a potential 20% decline in the Bitcoin hash rate post the upcoming halving event scheduled for April 2024. The report suggests that around 80 EH/s, equivalent to 20% of the current network hash rate, may be phased out as older mining hardware is replaced following the halving.
Scheduled for April 2024, the halving event marks a significant point in Bitcoin’s mining landscape, where miners’ rewards are halved as a mechanism to control crypto inflation. This will be the fourth halving in Bitcoin’s history.
The report emphasizes the critical role of the Bitcoin mining industry in the context of the impending halving. Based on the current Bitcoin price, the report estimates miners’ four-year block reward potential at approximately $20 billion, reflecting a substantial decrease of around 72% from its peak of nearly $73 billion over two years ago.
As of the report’s publication, the price of Bitcoin stands at $26,781 according to CoinMarketCap data.
JPMorgan analysts Reginald Smith and Charles Pearce highlight the importance of mining operators possessing the best value concerning existing hash rate, operational efficiency, power contracts, funded growth plans, and liquidity. The report also reveals the initiation of coverage on various mining companies by the bank, including an overweight rating and $5.50 price target for CleanSpark, an underweight rating with a $5 target for Marathon Digital, an underweight rating with a $6.50 target for Riot Platforms, and a neutral rating for Cipher Mining. Iris Energy received an upgrade to overweight from neutral.
In a related development, the U.S. Securities and Exchange Commission (SEC) has deferred the approval of a spot Bitcoin ETF until later this month. The crypto community is hopeful that a positive decision could potentially attract more mainstream investment.
