JPMorgan says falling mining difficulty trims bitcoin production cost to $77k, but rebound looms

JPMorgan’s analysts estimate that recent declines in Bitcoin’s network hashrate and the associated fall in mining difficulty have reduced the bank’s modeled all‑in production cost to roughly $77,000 from about $90,000 at the start of the year. The pullback in aggregate mining competition followed a period in which uneconomical rigs were idled or retired amid lower BTC prices and weather‑related outages — notably severe winter storms that left some large U.S. facilities without electricity. Network metrics tracked by market participants show seven‑day average hashrate slipping below the 1,000 exahash-per-second (EH/s) threshold with intramonth troughs near ~700 EH/s, and a recent difficulty retarget easing from near 156 trillion to roughly 146.5 trillion. JPMorgan frames that decline as a form of industry clearing: marginal, higher‑cost miners exit or pause, which transiently improves per‑unit economics for surviving operators. The bank also observes early signs of hashrate recovery as more efficient miners scale into the available share, implying that difficulty and modeled production cost are likely to rise at the next retarget if that trend continues. Separately, listed U.S. miner equities saw a mid‑double‑digit month‑over‑month market‑cap rebound in January — JPMorgan tracked the peer group near ~$60 billion combined — a move the bank attributes to easing competition, improved block‑reward revenue per EH/s, and investor expectations for alternative revenue from converting excess power and cooling into AI/high‑performance computing (HPC) colocation. That conversion optionality has helped re‑rate some names, but JPMorgan cautions execution risks: accelerator supply tightness, packaging and test backlogs, permitting hurdles, the need for firmed 24/7 power and battery arrangements, and concentrated customer risk could slow or limit monetization. The analysts note miners have sold BTC reserves to cover operations and debt service, amplifying price weakness earlier in the year, but they argue that the exit of marginal capacity is stabilizing supply dynamics. JPMorgan’s central view extends beyond mining mechanics: the firm expects institutional flows to reassert in 2026 as custody and product infrastructure deepen, a development that would support prices if regulatory clarity advances. For market participants, the key monitoring points are hashrate trajectories, upcoming difficulty adjustments, miner liquidity and balance‑sheet stress, disclosed AI/HPC contracts and evidence of steady institutional inflows — all of which will shape whether the recent easing in production cost remains temporary or reverses as hashpower redeploys.