cc.Link
  • Home
  • News
  • NFT
  • Videos/Tips
  • Mining
    • How to Mine Bitcoin
    • Top Mining Software
    • Mining Articles
  • Tools
    • Live Crypto
    • Free Wallet
  • Live
  • Marketplace
  • Contact us
No Result
View All Result
cc.Link
  • Home
  • News
  • NFT
  • Videos/Tips
  • Mining
    • How to Mine Bitcoin
    • Top Mining Software
    • Mining Articles
  • Tools
    • Live Crypto
    • Free Wallet
  • Live
  • Marketplace
  • Contact us
No Result
View All Result
cc.Link
No Result
View All Result
Home Mining

The Rising Cost Of Energy Impacts Bitcoin Mining Profitability

ccLink by ccLink
April 20, 2022
in Mining
0
The Rising Cost Of Energy Impacts Bitcoin Mining Profitability
189
SHARES
1.5k
VIEWS
Share on FacebookShare on Twitter

The relationship between energy prices, hash rate, difficulty and the bitcoin price will be extremely important as the price of energy rises.

The relationship between energy prices, hash rate, difficulty and the bitcoin price will be extremely important as the price of energy rises.

Wildcatters drilling wells in hopes of finding oil.

The below is a direct excerpt of Marty’s Bent Issue #1194: “Rising energy price, difficulty, and their effect on mining profitability.“ Sign up for the newsletter here.

Here’s something to pay close attention to in the coming months: the economics of the bitcoin mining industry. With the bitcoin price staying in a tight price range for the first three-and-a-half months of the year as hash rate and difficulty have risen consistently (for the most part) alongside surging energy prices, your Uncle Marty has his antennae perked for signs of struggle in the mining world. The current market conditions are certainly putting a strain on many miners at the moment. Particularly those who do not have (or think they have) fixed electricity prices that are relatively low compared to the rest of the market.

As energy prices rise and miners who made purchases a while ago begin to get ASICs delivered and attempt to reap payback as quickly as possible by plugging said ASICs in as quickly as possible, driving hash rate and difficulty up in the process, the market conditions are getting very tight out there for many operators. If the price of bitcoin remains locked in the range that it has been trading in for the last four months, miners continue to plug in more ASICs as they get delivered and energy prices continue to rise, we could see a lot of blow ups in the market that lead to some consolidation among players.

What will be most interesting to see is how power purchase agreements (PPAs) hold up under these conditions. Many miners that leverage the grid to mine typically engage in PPAs with a fixed price of electricity over a specified period of time to lock in a part of their operating expenditures (opex). If raw energy input prices continue to climb at the pace that they have over the last year, the utility companies that signed those PPAs are increasingly incentivized to figure out ways to get out of those PPAs so that they can increase their margins and continue to operate in an extreme market. Does upstream price pressure force the hands of utilities companies to the point where they are forced to renegotiate their PPAs mid-contract? If so, how many miners who baked in fixed electricity costs get wiped out due to an unexpected rise in opex that makes them unprofitable? Time will tell.

Keep your eyes on the relationship between energy prices, hash rate, difficulty, and the bitcoin price as the calendar turns. You may notice a bunch of people getting caught with their pants down.

View Source

Did you like this post? Consider donating to us.

[crypto-donation-box]

Related articles

Mining giant is forced to sell-out 79% of BTC to pay debt

Mining giant is forced to sell-out 79% of BTC to pay debt

July 7, 2022
Bitcoin mining stocks rebound sharply despite a 70% drop in BTC miners’ revenue

Bitcoin mining stocks rebound sharply despite a 70% drop in BTC miners’ revenue

July 6, 2022
Tags: EnergynftRising
Share76Tweet47

Related Posts

Mining giant is forced to sell-out 79% of BTC to pay debt

Mining giant is forced to sell-out 79% of BTC to pay debt

by ccLink
July 7, 2022
0

Mining giant is forced to sell-out 79% of BTC to pay debt Zeynep Geylan · 7 hours ago · 2...

Bitcoin mining stocks rebound sharply despite a 70% drop in BTC miners’ revenue

Bitcoin mining stocks rebound sharply despite a 70% drop in BTC miners’ revenue

by ccLink
July 6, 2022
0

Bitcoin (BTC) mining companies have suffered in 2022 due to the crypto bear market. Nonetheless, their stocks collectively saw a...

Ethereum’s Step Towards PoS, Bitcoin Mining Difficulty, Binance’s BTC Trading Fee Move + More News

Ethereum’s Step Towards PoS, Bitcoin Mining Difficulty, Binance’s BTC Trading Fee Move + More News

by ccLink
July 6, 2022
0

Source: AdobeStock / Proxima StudioGet your daily, bite-sized digest of cryptoasset and blockchain-related news – investigating the stories flying under...

AI-based AccessNow, Daniels to map accessibility of Regent Park

AI-based AccessNow, Daniels to map accessibility of Regent Park

by ccLink
July 5, 2022
0

An announcement late last week involving builder and developer The Daniels Corporation and accessibility technology company AccessNow represents a major...

These Six Mining Charts Illustrate The Bitcoin Bear Market

These Six Mining Charts Illustrate The Bitcoin Bear Market

by ccLink
July 5, 2022
0

Bitcoin’s price is down roughly 70% from its latest all-time high, and the mining sector is feeling the full weight...

Load More
  • Trending
  • Comments
  • Latest
Crypto exchange Gate.io to provide Pyth Network with price data

Crypto exchange Gate.io to provide Pyth Network with price data

November 25, 2021
Celsius Network Raises $400M Led by Canada’s 2nd Largest Pension Fund to Reassure Regulators

Celsius Network Raises $400M Led by Canada’s 2nd Largest Pension Fund to Reassure Regulators

November 20, 2021
NFTs in 2022: From Word of the Year to Mainstream Adoption & New Usage Cases

NFTs in 2022: From Word of the Year to Mainstream Adoption & New Usage Cases

January 3, 2022
Video game on NFT & #x 2122;, an Artwork That Commemorates Bitcoin and Bitcoiners

Video game on NFT & #x 2122;, an Artwork That Commemorates Bitcoin and Bitcoiners

January 9, 2022
AMC CEO Proudly Declares That the Company Now Accepts Various Cryptocurrencies as Online Payment

AMC CEO Proudly Declares That the Company Now Accepts Various Cryptocurrencies as Online Payment

0
New york city’s Incoming Mayor Wants to Be Paid in Bitcoin (At Least Temporarily)

New york city’s Incoming Mayor Wants to Be Paid in Bitcoin (At Least Temporarily)

0
International Money Laundering Watchdog Says Uh, Yeah, Better Regulate Cryptocurrency

International Money Laundering Watchdog Says Uh, Yeah, Better Regulate Cryptocurrency

0
No, Putin Isn’t Embracing Cryptocurrency Just Yet

No, Putin Isn’t Embracing Cryptocurrency Just Yet

0
NFTs Hammered by Crypto Market Downturn, Sales Down 92% Since January High

NFTs Hammered by Crypto Market Downturn, Sales Down 92% Since January High

July 7, 2022
Meebits Surpasses $500 Million in All-Time NFT Sales 

Meebits Surpasses $500 Million in All-Time NFT Sales 

July 7, 2022
Mining giant is forced to sell-out 79% of BTC to pay debt

Mining giant is forced to sell-out 79% of BTC to pay debt

July 7, 2022
What is the Ultimate Blue-chip Crypto Asset: BTC, NFTs, or Land?

What is the Ultimate Blue-chip Crypto Asset: BTC, NFTs, or Land?

July 7, 2022

Join our mailing list

Tags

ADA altcoin altcoin daily altcoins Binance bitcoin bitcoin analysis bitcoin crash bitcoin live bitcoin news bitcoin news today bitcoin prediction bitcoin price bitcoin price prediction bitcoin today Blockchain btc btc news btc price buy bitcoin Cardano Crypto crypto crash Cryptocurrency cryptocurrency news crypto market Crypto Monnaie cryptomonnaie Crypto News crypto news today DEFI Dogecoin ETH Ethereum Finance investing metaverse Money news nft Ripple Shiba inu Solana trading xrp

© 2022 CC.LINK

No Result
View All Result
  • Home
  • News
  • NFT
  • Videos/Tips
  • Mining
    • How to Mine Bitcoin
    • Top Mining Software
    • Mining Articles
  • Tools
    • Live Crypto
    • Free Wallet
  • Live
  • Marketplace
  • Contact us

© 2022 cc.Link.