Caught in the crossfire. The bitcoin mining is a bit like crypto canary. When the sector is doing well and prices are rising, miners rake in bitcoins and sell a small portion to pay their bills. Conversely, in wintry weather, unpaid bills pile up, and these mining professionals are forced to sell at a loss to pay off their debts. We recently saw that some of them were in the process of selling to cope with a particular situation. The comparison with the little caged birds that miners used to take to prevent Grisou’s blows is rather apt, as themining industry – of crypto – is very sensitive to external elements and in particular to energy prices. JP Morgan has just published a report that tells us a little more.
A double Kiss Cool effect for bitcoin miners
The specialists at JP Morganone of the world’s largest banks, have bent over on the case of bitcoin miners to determine which of them could survive the current situation. The industry is facing a number of negative factors such as the rise in the cost of energy priceson the one hand, and a significant rise in the mining difficultyon the other.
Worldwide inflation in electricity prices has not spared this sector, whose profitability is directly linked to this energy source:
« The main cost of mining is electricity, which affects the overall cost of bitcoin production. »
JP Morgan
However, the peak of inflation seems to have passed, and prices have already started to come downparticularly in United Stateshome to the vast majority of the world’s bitcoin miners.
« The average price of electricity for bitcoin miners worldwide is about $0.05 per kilowatt-hour (kWh). However, some major mining companies have been able to pay as little as $0.03/kWh. »
JP Morgan
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The energy mix as a solution to rising prices
This fall in prices has enabled some players to get their heads above water, especially as the rise in hashrate had put them under pressure.
« Falling electricity costs should help contain the rising cost of bitcoin production in the current phase of rising hashrate. »
JP Morgan
What if part of the solution was in the source of supply energy itself? This is one of the conclusions of this report, which clearly states that « bitcoin miners are looking for cheaper, sustainable energy sources to protect their profitability. ». To survive, bitcoin miners will therefore have to give priority to the energy mix in order to less dependent on fossil fuels.
Not everyone will survive, however, and that’s what the experts at JP Morgan have noted. For them, Core Scientific, Argo Blockchain or Iris Energy are in danger because of the factors outlined above, but also because of debts to be repaid which are weighing down their accounts. For the others, going green will be one way to survive.
Ironically, the miners will gain in profitability, by increasing their share ofrenewable energies. When profitability and the fight for ecology come together, all the signs are green for the great leap forward in green mining. But some industry professionals haven’t waited for the experts at JP Morgan to understand the benefits of these virtuous practices for both the planet and your wallet.
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