The bitcoin (BTC) hashrate continues to hit new all-time highs as competition between miners escalates ahead of the next halving event, expected second-quarter 2024, JPMorgan (JPM) said in a research report Thursday.

The halving will reduce issuance rewards to 3.125 BTC from 6.25 BTC, “implying a reduction in miners’ revenues, effectively increasing bitcoin’s production cost at the same time,” the report said.

“While bitcoin halving is seen as having a positive effect on the bitcoin price given the production cost acted historically as a floor, it poses a challenge for bitcoin miners,” analysts led by Nikolaos Panigirtzoglou wrote.

Hashrate refers to the total combined computational power used to mine and process transactions on a proof-of-work blockchain such as Bitcoin.

JPMorgan says miners with lower electricity costs will find it easier to survive, while miners with higher power costs may struggle after halving occurs.

The bank estimates that a 1 cent per kilowatt hour (kWh) change in the electricity cost could cause a $4,300 change in the bitcoin production cost. After halving, this sensitivity would double to $8,600, thereby “increasing the vulnerability of higher cost producers.”

The steep rise in the hashrate implies increasing competition among bitcoin miners with more mining rigs being deployed, the note said.

It is unlikely the hashrate will continue to rise at the same pace following the halving event “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 report added.

Read more: Only Bitcoin Miners With Low Power Costs and High Sustainable Energy Mix WIll Survive: JPMorgan