JPMorgan estimates the cost to produce a Bitcoin has dropped to $77,000 from $90,000 since the start of the year, driven by a decline in network hashrate.
In the past, this cost has acted as a “soft price floor” for Bitcoin, meaning BTC prices often find support near that level because miners do not want to sell at a loss below their production cost. The recent drop in production costs occurred because Bitcoin’s hashrate and mining difficulty decreased in recent months.
Hashrate measures the total computing power used to mine Bitcoin, while the network automatically adjusts mining difficulty to ensure that new blocks are added roughly every 10 minutes. When hashrate falls, difficulty also drops.
Mining difficulty has fallen by about 15% so far this year, analysts led by managing director Nikolaos Panigirtzoglou say. Mining difficulty is recalculated roughly every two weeks.
The system is intended to keep Bitcoin’s block production predictable. When fewer machines try to mine Bitcoin, the network lowers the difficulty. This makes it easier for the other miners, however, to solve the difficult puzzles needed to add new blocks to the blockchain.
Lower production costs boost efficient miners’ profits
There are two major reasons for the decline, the analysts said. The price of Bitcoin has dropped this year, making mining less profitable for operators with high electricity costs or those with less efficient, older machines. Many of these miners were forced to turn off their equipment because they couldn’t continue operating profitably.
Second, intense winter storms in the United States — not least in Texas, where hundreds of mining works — resulted in temporary shutdowns. In extreme weather, however, grid operators frequently restrict electricity use to safeguard the power network. Large mining complexes were among those that were forced to turn off.
Historically, a sharp drop in mining difficulties has often been considered an indication of “capitulation.” That happens when high-cost miners leave the market and sometimes sell their bitcoin to get financed.
The same happened in 2021 when China outlawed Bitcoin mining. That decision saw difficulty drop by about 45% between May and July of the year before, then rebound by the end of 2021.
JPMorgan thinks the falling difficulty is a relief for miners with businesses running today. Fewer competitors mean each unit of computing power is more likely to earn bitcoin rewards. This enhances profit margins for more effective miners and enables them to capture market share from those who have exited.
Some high-cost miners have been selling their Bitcoin reserves to fund daily operations, reduce debt, or shift their focus to artificial intelligence projects this year, the analysts said. The selling activity put added pressure on Bitcoin’s price year to date.
But it said it thinks the bad news for this adjustment has already subsided. When weaker players exit a stage like this, the remaining miners are usually much stronger and more efficient.
JPMorgan said it’s already observing signs of a hashrate rebound. Maintaining that trend, mining difficulty and production costs may increase again in the next update.
JPMorgan expects stronger institutional crypto investment
Despite the recent challenges in mining, JPMorgan remains optimistic about the broader crypto market heading into 2026. In a separate report titled “Alternative Investments Outlook and Strategy,” the bank said it expects stronger flows into digital assets next year, mainly driven by institutional investors rather than retail traders.
The analysts believe additional crypto regulations in the United States could help boost institutional participation. They pointed to possible legislation, such as the Clarity Act, as a factor that could create clearer rules and encourage more large investors to enter the market.
JPMorgan also repeated its long-term price target of $266,000 for Bitcoin. This estimate is based on a comparison with gold, adjusted for volatility. JPMorgan argues that if negative sentiment fades and Bitcoin is again viewed as a strong hedge against extreme economic risks, its price could rise significantly over time.
At the time of writing, Bitcoin is trading at around $65,660, down more than 1% over the past 24 hours, according to market data.
