Source: Zhitong Finance

J.P. Morgan Chase and Deutsche Bank believe that the positive impact of Bitcoin's upcoming “halving” of software updates every four years is already largely reflected in the price. According to information, halving has long been touted as one of the key factors supporting the value of this cryptocurrency.

J.P. Morgan analysts wrote in a report on Thursday that the main impact will not be the price of Bitcoin, but Bitcoin mining. As unprofitable miners exit the Bitcoin network, they expect the industry to consolidate, and publicly traded companies are most likely to gain market share.

J.P. Morgan analysts wrote, “Publicly listed Bitcoin miners are well-positioned to take advantage of the new environment, mainly because they have greater access to financing, particularly equity financing. This helps them scale up their operations and invest in more efficient equipment.”

Similarly, Deutsche Bank analysts do not expect Bitcoin's price to rise significantly after being halved. The bank's analysts said that since the Bitcoin algorithm has estimated the halving, this event has been digested in the market.

This event has already been taken into account in the market. Mining rewards are fixed amounts of bitcoins released from the network to reimburse miners who verify their transactions. According to data from the cryptocurrency mining and analysis website mempool.space, the change could take effect late Friday.

Analysts at Deutsche Bank wrote that in the past, after Bitcoin was halved, the hash rate, which measures the industry's total mining capacity, usually declined because some miners were squeezed out of the market due to excessive prices. “As mining rewards dwindle, participating in the process of guessing hashes and adding blocks to the blockchain is less profitable.”

Bitcoin's hash rate plummeted 25%, 11%, and 25%, respectively, after the first three halves, according to Deutsche Bank data.

Although prices are not expected to fluctuate drastically, Deutsche Bank believes that Bitcoin prices will remain high in anticipation of spot Ethereum ETF approval, central bank interest rate cuts, and regulatory changes.

They wrote, “In addition to that, second-tier solutions and the surge in DeFi activity have enhanced the actual utility of the network, and this setup is beginning to be very beneficial to the Bitcoin ecosystem and the wider crypto space.”

Currently, the US accounts for 40% of all Bitcoin mining. However, both J.P. Morgan Chase and Deutsche Bank believe that some Bitcoin mining companies may seek to diversify their operations in “low energy cost regions” (such as Latin America or Africa) to position their inefficient mining supply and derive recycling value from those mining rigs that were otherwise idle.

edit/lambor