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The upcoming Bitcoin halving event will form a crucial test for miners as they navigate reduced rewards and increased production costs, according to JPMorgan.

“Miners with lower electricity costs would find it easier to cope after the halving event, while miners with higher electricity costs could struggle post halving event,” JPMorgan strategists led by Nikolaos Panigirtzoglou wrote in a report on Thursday. Put simply, the halving event will determine miners’ ability to adapt and remain profitable in a changing environment.

The Bitcoin halving is an event that occurs approximately every four years, reducing the reward for mining new Bitcoin blocks by half, effectively decreasing the rate at which new bitcoins are created, in order to control inflation and maintain the scarcity of bitcoin over time. The upcoming Bitcoin halving will see the block reward halve from 6.25 bitcoin to 3.125 bitcoin.

While Bitcoin’s halving is generally seen as having a positive impact on the price of Bitcoin, it poses challenges for Bitcoin miners, because the cost of production has historically acted as a floor price, according to JPMorgan analysts. “According to our current bitcoin production cost model, one cent per kWh [kilowatt-hour] change in the electricity cost induce a $4,300 change in the bitcoin production cost. Post halving this sensitivity would double to $8,600 thus increasing the vulnerability of higher cost producers,” the analysts said.

Competition among Bitcoin miners is also intensifying ahead of the halving event as the Bitcoin hash rate, or the total computational power to mine the cryptocurrency, is increasing, according to the analysts. Post the halving event, however, the Bitcoin hash rate may not continue to rise at the same pace without any sustained rise in the Bitcoin price above its production cost or a large increase in transaction fees that could offset the reduction in issuance rewards, the analysts said.

“And at the moment the decline in the hype around ordinals poses an additional challenge for bitcoin miners’ revenues,” the analysts concluded.

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

The surge in the crypto exchange’s share price was driven largely by investors who saw the decision as a representing a rejection of the SEC’s argument in the lawsuit it filed against Coinbase in June, the report said.

The court’s decision weakens the SEC’s stance that the securities law is clear and no separate clarity is required for digital assets, the report said.

Congressman Ritchie Torres has asked for two separate independent investigations of the U.S. Securities Exchange Commission (SEC) for its “haphazard and heavy-handed approach to digital assets.”

XRP’s knocked out BNB as the 4th largest crypto by market cap, after its value surged more than 60% after a partial victory against the SEC.

The founder of the bankrupt crypto lender has pleaded not guilty to charges including fraud and manipulation of the CEL token.

A growing number of cryptocurrency exchanges are reopening trading in XRP, after a mixed ruling from a United States federal judge on the ongoing legal battle between the securities regulator and Ripple.

Crypto outfits including Crypto.com and Kraken Pro said Friday morning Asia time that XRP is once again listed on their trading platforms. 

Many exchanges operating in the U.S. halted XRP trading when the Securities and Exchange Commission filed a lawsuit against Ripple Labs at the end of 2020. Their about-turn comes with many observers celebrating yesterday’s mixed ruling as a key victory for the sector. 

“Buy XRP at true cost with USD, EUR, GBP, and 20+ fiat currencies,” Crypto.com tweeted, while Kraken Pro said on Twitter that XRP is “back in full-trading mode” on its platform. 

Earlier today, the Gemini crypto exchange said it is considering relisting XRP. “Given today’s ruling that the sale of XRP on exchanges is not a security, Gemini is exploring the listing of XRP for both spot and derivatives trading,” Gemini said in a tweet.

Coinbase, the largest crypto exchange in the U.S., said yesterday that it will re-enable trading of XRP. “We’ve read Judge Torres’ thoughtful decision,” Coinbase Chief Legal Officer Paul Grewal tweeted. “We’ve carefully reviewed our analysis. It’s time to relist.”

Some uncertainty over the status of XRP persists, however. The mixed ruling from the Southern District Court of New York in the lawsuit between the SEC and Ripple is by no means the end of that dispute. The case could now go to trial or be appealed. 

Right time to resume XRP trading?

While Judge Analisa Torres ruled yesterday that some of its sales of XRP did not fully meet the definition of a securities offering, she also stated that Ripple’s sales to institutional buyers were unlawful securities sales.

“It seems that the wording was clear enough for [many exchanges], or at least that their legal departments feel like they can withstand any legal blowback based on the current ruling,” said Justin d’Anethan, head of APAC business development at crypto market maker Keyrock.

“Admittedly, in the wake of many exchanges’ woes, the listing and trading of a token that was characterized as ‘not a security’ seem reasonable,” d’Anethan added.

Youwei Yang, chief economist of Bit Mining, said exchanges often open trading for popular coins “sooner rather than later.”

“Exchanges profit from the volatility and hype surrounding coins, as greed and fear create more opportunities for transaction volume and fees,” Yang added. “Exchanges and participants may be overly optimistic, but the potential return from reopening outweighs the risk of lawsuits and fines due to the perceived success of Ripple.”

Others were less measured. Jeff Mei, COO of BTSE exchange, said the ruling “is a big win for the industry overall, offering clarity to the status of digital assets.”

He continued, “The SEC has brought over 100 enforcement crypto actions on the basis that different tokens were securities, many of these ended in settlement. Both the Ripple and Coinbase cases focus on registration requirements and whether certain digital assets are securities under U.S. law. Although the ruling decision was based on the specific details of the Ripple case, the results will definitely support other firms who are in legal battles with the SEC regarding the classification of their products in the U.S.”

Wayne Huang, co-founder and CEO of Taipei-headquartered XREX exchange, said the ruling gave many exchanges, especially those serving U.S. investors, a signal that it might be compliant to list or relist XRP. “The courts uphold defense mechanisms for the industry to fight against unfair law enforcement,” he added.

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

XRP token market capitalization has jumped to over $40 billion, its largest level since April 2022.

Many Layer-1s are also soaring as SEC cases are called into question after favorable XRP ruling.

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