The Bitcoin (CRYPTO: BTC) price is down 1% over the past 24 hours.
The world’s biggest token by market cap is currently trading for US$21,159 (AU$30,601). That’s down 56% year-to-date and down 69% since hitting all-time highs on 10 November last year.
Over the past seven days, the Bitcoin price, notorious for its volatility, has traded in a rather tight range, hitting a low of US$19,848 and a high of US$21,783.
Here’s why that price level could be of critical importance to crypto miners.
Crypto miners are pressuring the Bitcoin price
No two crypto miners will incur identical costs to mine a token. Smaller operations tend to incur higher costs per token than larger outfits. And the price they pay for their electricity is a major factor, as successful mining entails the use of multiple, energy-hungry computer arrays.
According to Bloomberg reports, investment company Arcane Crypto estimates it costs a big mining company some US$8,000 for each Bitcoin. That’s assuming relatively new mining machines and average power prices.
But once you add in overhead costs for infrastructure and interest rates, another company in the crypto space Securitize Capital says it could already be costing some crypto miners more than US$20,000 per token.
Which is right at the level the Bitcoin price has been trading.
That’s seeing more miners selling their Bitcoin on exchanges, adding to the ready supply and pressuring the price. And, according to JPMorgan Chase & Co, this could see the Bitcoin price remain under pressure into the third quarter of 2022.
According to JPMorgan’s strategists, led by Nikolaos Panigirtzoglou (as quoted by Bloomberg), “Offloading of Bitcoins by miners, in order to meet ongoing costs or to de-lever, could continue into Q3 if their profitability fails to improve.”
They added that the selling “has likely already weighed on [Bitcoin] prices in May and June, though there is a risk that this pressure could continue”.