Morgan Stanley analysts say Bitcoin mining is unprofitable at any price below $8,600 and predict miners to stop creating the cryptocurrncy, if it fails to recover any time soon, CNBC reports.
"We estimate the break-even point for big mining pools should be US$8,600, even if we assume a very low electricity cost (US$0.03 kW/h)," equity analyst Charlie Chan and his team said in a Thursday note.
Large groups of miners, mostly in China, work together in "pools" to improve efficiency. But as more miners participate, the difficulty of the process increases.
Morgan Stanley analysts believe that even if the Bitcoin price stays the same in 2018, mining profits will drop rapidly, considering that “injection of new mining capacity will further increase the mining difficulty.”
According to the report, demand for Bitcoin mining hardware will decline and companies that sell the specialized mining chips may have more leeway this year.
Taiwan Semiconductor Manufacturing (TSMC), the largest semiconductor foundry company in the world, which also makes chips for Bitcoin (TIKER: BTC.EXANTE) mining, cut its revenue forecast for the year today, citing uncertainty in cryptocurrency mining demand as a factor.
Bitcoin, which has been struggling to bounce back after tumbling from a record high above $19,000 in mid-December, traded near $8,200 on Thursday.
By Siranush Ghazanchyan