Erik Weijers, 2 months ago

Bitcoin miners breathe a sigh of relief

It's nice for every BTC hodler to see the price go up. But for Bitcoin miners the recent pump - in fact, one of the best weeks in Bitcoin's history - is more than just fun: it's existential. Bear market prices and high electricity costs have hurt them hard in the past 12 months. Finally, the tides seem to be turning. 

Fun fact to start off: Bitcoin investors who would have daily dollar cost averaged a small amount since January 2022 - roughly the beginning of the bear market - would have been profitable again (you can toy with the numbers on DCABitcoin). 

Highest revenue in almost a year

Back to the miners. This week, miner revenues have jumped to the highest level since June 2022, breaking the yearly average. This revenue increase comes at a time when miners who are connected to the grid are finally seeing electricity prices go down, following lower gas and oil prices. So the situation is the positive flipside of the trend of the past year: lower BTC prices and higher electricity prices.

For some mining companies, the relief rally may come too late. Core Scientific, for example, had to file for bankruptcy in the depths of the bear market, three months ago. It is still in the process of trying to survive by restructuring. Other companies had to panic sell their stash of Bitcoin to pay their electricity bills and employees.

Future of Bitcoin mining: energy companies

Bitcoin mining has once again proven to be a cut-throat industry. Any company that uses power from the electricity grid, is vulnerable to electricity price fluctuations. That is why it is thought that Bitcoin mining will be more and more integrated in traditional energy companies. After all, they control the energy. 

Let's give some examples. Oil companies can place Bitcoin miners at spots where gas is a waste product. By using that gas to power a Bitcoin miner, they reduce greenhouse gas emissions and make some money on the side. In general, energy companies have an edge compared to normal companies. They are experts in producing and distributing energy, after all. That saves them costs: they don't have to pay other companies for distribution. 

Also, energy companies can cleverly benefit from both high and low electricity prices. If the prices are high, they sell to the market. If prices are low, they could use a portion of its generated output to power their own Bitcoin mining operations.

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