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You are here: Home / Archives for Bitcoin Mining

Bitcoin Mining

Bitcoin Mining Difficulty Soars As BRC20 Sparks Hashrate Frenzy

May 18, 2023 by Ammar Raza

Recently, Bitcoin has experienced a remarkable surge in mining difficulty, shattering previous records, according to statistics by BTC.com. This monumental event took place at block height 790,272, triggering a significant 3.22% increase in mining difficulty, reaching an astonishing 49.55 trillion. 

image 61
Source: BTC.com

Adding to the fervor, the current average hashrate now stands at an impressive 354.55 EH/s. The extraordinary rise in the demand for Ordinals BRC-20 has sparked a surge in mining activities, leading to a surge in the deployment and subsequent amplification of hashrate among various mining machines. This surge is set to redefine the landscape of cryptocurrency mining.

However, these statistics highlight the continuous growth and resilience of Bitcoin in the face of challenges. With each passing milestone, Bitcoin solidifies its position as the leading cryptocurrency, captivating the attention of enthusiasts and investors worldwide. 

BRC-20 Token Standard Triggers Skyrocketing Bitcoin Transaction Fees

Previously, on May 10th, it was reported by Hashrate Index that the BRC-20 token standard, a new inscription token standard, has caused Bitcoin transaction fees to skyrocket, reaching their highest levels since 2017. 

The market for inscriptions witnessed intense bidding wars over the weekend, driving transaction fees to unprecedented heights. Some block rewards even exceeded the previous halving epoch’s block subsidy of 12.5 BTC. 

image 62

This fee frenzy resulted in a massive payday for Bitcoin miners, with transaction fees comprising the second-largest share of block rewards ever recorded.

Despite the exorbitant fees, the BRC-20 boom did not lead to all-time high block sizes. However, the profitability for miners was undeniable. The average fee-to-block-subsidy ratio soared to 33.09% over the past week, compared to just 6.37% the previous week. 

image 62

Miners reaped a staggering 2749.95 BTC ($63,212,552) in transaction fees in May alone, surpassing the total from the year’s first four months. This transaction fee mania, coupled with Bitcoin’s price recovery, has revitalized mining revenues, bringing them back to levels not seen since May and early June of the previous year. 

Although profitability has not fully reached the highs of May 2022, the recent fee and price actions have significantly improved the mining landscape. With the BRC-20 tokens driving these gains, Bitcoin’s transaction fee boom continues to fuel the industry’s growth.

Related Reading | Bitcoin’s Utility Takes A Hit: Daily Unique Addresses Drop Below 800k In May

Filed Under: News, Bitcoin News Tagged With: Bitcoin Mining, BRC20, Cryptocurrency

Bitcoin Mining: Bitmain Hit With Hefty Fine, NC County Considers Halting Mining

April 11, 2023 by Mishal Ali

According to a report, the world’s largest Bitcoin mining machine company, Bitmain, was slapped by the Beijing tax bureau in April with a hefty fine of about $3.55 million.

The company was found guilty of mainly unpaid personal income taxes, as the Chinese government has been ramping up its tax inspections on the cryptocurrency industry since last year. However, Bitmain has not released any official statement regarding the fines.

It is not the first time Bitmain has previously caught the attention of the authorities on multiple occasions concerning tax-related matters. 

The Fourth Inspection Bureau of the Beijing Municipal Taxation Bureau of the State Administration of Taxation recently imposed a penalty of approximately 24.9687 million yuan on the company for various infractions, as reported by the Qichacha APP.

The details of the violation indicate that under the “Tax Collection and Administration Law of the People’s Republic of China,” the organization must deduct and remit individual income tax for perks such as travel subsidies provided to its employees.

However, in August 2022, the inspectors delivered the “Notice of Order to Correct Within a Deadline” to Beijing Bitmain. But the company has failed to withhold and pay the above-mentioned personal income tax, totaling 16.6458 million yuan.

This latest development clearly indicates that the Chinese government is taking a firm stance against tax evasion in the cryptocurrency industry, particularly targeting Bitcoin miners and large traders. 

The government is expected to persist in its efforts to control Bitcoin miners and major traders, and individuals who are caught breaking tax regulations could potentially face significant fines. The goal is to make certain that these companies adhere to the country’s tax statutes and rules.

The recent penalty levied on Bitmain highlights the importance of adhering to tax laws and regulations for all businesses operating in China. 

Companies in the cryptocurrency sector need to take a proactive approach to comply with regulations to prevent facing significant fines and legal disputes down the road, given the heightened scrutiny of governments worldwide.

NC County Considers Temporarily Halting Bitcoin Mining

According to another latest update, Buncombe County in North Carolina is proposing to temporarily halt Bitcoin and cryptocurrency mining in the area for one year.

The county commissioners have expressed concerns about the impact of mining on the environment and the community. Currently, the county’s ordinances do not specifically address cryptocurrency mining. 

A public hearing is scheduled for May 2, where community members can share their thoughts on the proposed moratorium. Similar concerns have been raised across the US, with a Texas Senate committee recently passing legislation limiting energy agreements for Bitcoin mining.

Meanwhile, US Bitcoin Corp reached a tentative agreement to resume operations after complying with regulations.

Related Reading | Cardano’s Charles Hoskinson Hints At His Next Move

Filed Under: News, Bitcoin News Tagged With: Bitcoin (BTC), Bitcoin Mining, bitmain, Cryptocurrency

Bitcoin Mining Gets Boost As Arkansas Passes “Right to Mine” Bill Of 2023

April 8, 2023 by Mishal Ali

Arkansas has made history by passing a bill titled “The Arkansas Data Centers Act of 2023”, becoming the first state in the United States to provide protection for Bitcoin mining and establish clearer regulations for digital mining within its borders.

Dennis Porter, one of the co-founders and CEO of SatoshiActFund, has expressed excitement about Arkansas achieving an unexpected victory. He anticipates participating in the signing ceremony alongside Sarah Huckabee in the near future.

The state of Arkansas has pulled off a surprise victory and become the first in the nation to pass the ‘Right to Mine’ #Bitcoin bill in both the House and Senate.

I hope to join @SarahHuckabee for the signing ceremony soon.

— Dennis Porter (@Dennis_Porter_) April 8, 2023

Sponsored by Senator Joshua Bryant and Rep Rick McClure, the bill was first read on March 30 and has since gone through multiple readings and committee stages in both the House and Senate. After being slightly amended, the bill was passed in both chambers and has now been sent to the governor for approval.

The legislation acknowledges the contribution of data centers to the economy by generating employment opportunities and paying taxes. The bill outlines measures to prohibit local authorities from enforcing regulations that single out the crypto-mining sector, To avoid biased taxes and regulations aimed at Bitcoin miners. 

Moreover, guidelines have enabled digital asset mining companies to contest zoning adjustments. The bill also bars the Arkansas public utility provider from imposing “unreasonably discriminatory rates” on miners. 

Additionally, the bill defines several terms, such as digital assets, digital asset mining, node, and digital asset mining business. This move will likely encourage more digital asset mining companies to set up operations in the state, bringing new jobs and investment.

However, the bill is a significant step forward for the crypto industry and could pave the way for similar legislation in other states in the future.

Passing Bitcoin Mining Bill Sparks Excitement In Crypto Community

Arkansas’ passing of the “Right to Mine” bill has sparked mixed reactions from the community. While some celebrate the historic move, others question its motivations. 

Some have pointed out that Arkansas is the first state to pass a bill specifically protecting the right to mine Bitcoin. Dennis Porter, CEO and Co-Founder of SatoshiActFund received praise for his work on the political side of the Bitcoin battle. 

However, some expressed concern that greed may be the driving force behind the bill. Nonetheless, the passing of this bill is a significant step forward for the cryptocurrency industry, and its impact remains to be seen.

Awesome, but surely you can see the walls are closing in around you. The question you fail to answer is it greed?

— ☀️a⊶u⊶r⊶u⊶m⊶ ⊶m⊶a⊶x⊶i⊶m⊶u⊶s🌔 (@AurumMaximus) April 8, 2023

Related Reading | Ethereum Set To Rise: OKX Survey Shows 63% Expect $5k ETH By 2023

Filed Under: News, Bitcoin News Tagged With: Arkansas, Bitcoin Mining, Crypto

Over 50% Of Bitcoin Mining Relies On Renewables, Says ESG Report

April 3, 2023 by Mishal Ali

A new report from ESG analyst Daniel Batten has found that more than 50% of the energy used in Bitcoin mining comes from renewable energy sources. The report challenges previous literature from Cambridge Centre for Alternative Finance, which postulated that coal was the primary energy source used by the Bitcoin network. 

Batten’s report takes into account off-grid mining and finds that hydro represents 23% of all Bitcoin mining, followed by wind at almost 14%. Batten explains that hydropower is the main source of energy for sustainable mining companies like OceanFalls, Hut8, Iris, Sato, Terawulf, Statar/Lake Parime, Gridshare, Blockfusion, and HPG, with some being entirely powered by it while others use it for the majority of their energy needs.

image
Source: Batcoinz

Gas accounts for 21.14% of Bitcoin mining, while coal is used much less than in electric vehicles (EVs), comprising only 22.92% of the network’s energy consumption. This amount is 38% lower than the energy consumption of EVs.

Sustainability Of Bitcoin Network Increasing At 6.2% Annually

The report notes that the sustainability of the Bitcoin network is increasing at a rate of 6.2% per year, which is expected to cause a decline in the relative percentages of coal, gas, and other fossil fuel sources.

The report’s methodology involved using the CCAF model to identify the on-grid portion of BTC mining and Our World in Data statistics to calculate the breakdown of the on-grid portion by energy source. 

The BEEST model was then used to assess exclusions not factored into the CCAF model, such as ERCOT data and off-grid mining data. Finally, each mining company’s sustainable and fossil fuel energy sources were assessed and aggregated.

Batten’s report suggests that Bitcoin mining is not 100% tethered to the grid, meaning that the network’s energy source and emissions may vary from the grid mix of that nation. In contrast, EVs are fully electrified technology, and their emissions arise from using electricity generated using in part fossil fuels. 

However, the report concludes that if sustainable energy growth continues to trend upward, the relative percentages of coal, gas, and other fossil fuel sources in the Bitcoin network will likely decline.

Related Reading | Weekly Market Watch: Bitcoin Bulls Lead The Way, Altcoins Follow Suit 

Filed Under: News, Bitcoin News Tagged With: Bitcoin Mining, Hut8, Iris, OceanFalls, Sato

Bitcoin Mining Difficulty Hits Record High Reviving Miners’ Fortunes In Q1 2023

March 24, 2023 by Mishal Ali

Bitcoin mining difficulty has set a new record high, with an increase of 7.56% to 46.84T at block height 782208. The cryptocurrency’s current average hashrate stands at 340.23 EH/s. 

image 74
Source: BTC.com

This year, the mining difficulty has risen by 30%, while Bitcoin’s price has seen a 70% surge since January. Additionally, according to a report by Hashrateindex, Bitcoin is enjoying a historic Q1 in 2023, with its price rising more than any other Q1 in its short history.

The positive price action revived Bitcoin miners, who were previously struggling to stay afloat. The current USD hash price for Bitcoin is $85/PH/day, a number that would have been considered a nightmare last summer but which is now seen as a godsend. 

The hash price average for Q1 2023 ($72/PH/day) may not look much better than Q4’s average ($65/PH/day), but it has made all the difference for some previously margin-starved miners.

image 75
Source: Hashrate Index

Hash-price Revival Benefits Bitcoin Miners

According to the report, miners are faring better than they were at the end of 2022, when thin margins made it difficult for even average-cost miners in the US to break even. 

However, the recent rally in BTC’s hash price has improved the situation, giving miners a bit more financial comfort. Despite energy prices remaining high, miners are now making 41% more cash flow from their machines than at the beginning of 2023, which has improved their operating margins. 

Some popular Bitcoin mining rigs have also seen changes to their breakeven power costs. For example, the S19 XP 140 TH/s went from $0.115 to $0.165, the S19j Pro 100 TH/s from $0.081 to $0.117, the M50S 126 TH/s from $0.095 to $0.137, and the M30s++ 112 TH/s from $0.08 to $0.115. 

image 76
Source: Hashrate Index

The report gives the instance of a miner with average power costs in Texas earning $0.50 a day with an S19j Pro at the end of 2022 but now makes $3.10 a day, with an increased margin of $36.5.

While the hash price revival has given miners more breathing room, they cannot relax. Bitcoin’s hashrate has been growing steadily, which could stunt the current hash price rally if Bitcoin’s price doesn’t keep up. 

The price of Bitcoin itself will be highly dependent on the course of the Federal Reserve’s future interest rate changes, any financial system contagion from recent bank runs, and the outlook of the general economy in the year to come.

Nevertheless, the hash price revival has given miners more cushion between their operating margins and breakeven thresholds, but they cannot relax just yet. Bitcoin’s hashrate has been growing steadily, which could impact the current hash price rally if the BTC price doesn’t keep up.

Related Reading | Coinbase CEO’s Stock Sell-Off Amidst Wells Notice Raises Eyebrows

Filed Under: News, Bitcoin News Tagged With: Bitcoin (BTC), Bitcoin Mining

HIVE Sees 13% YOY Increase In Bitcoin Production Despite Crypto Winter

February 22, 2023 by Ammar Raza

Crypto miner HIVE Blockchain reported significant losses in its latest quarterly earnings report. While the company earned $14.3 million in Q3, ending December 31, 2022, by mining 787 Bitcoin. 

According to the press release, the loss in revenue is due to Ethereum’s Merge, which caused the company to lose the higher margin it had been making on Ethereum mining. 

image 86

The average Bitcoin prices this quarter decreased from the prior quarter by approximately 15%, adding to the overall losses. However, it realized a profit from mining operations through hedging energy contracts, selling power back to the grid, and optimizing its operating capacity.

HIVE notes that its production of Bitcoin this quarter represents a 13% increase from the same period last year, reflecting continued growth in the company’s operating hashrate. The increase in the quantity of production is due, in large part, to the completion of the company’s New Brunswick data center campus. 

HIVE’s Strategy: No Costly Loans Or Pledged Bitcoins

Despite the losses, HIVE believes that its strategy will help it navigate through the ongoing crypto winter. The company has not borrowed expensive debt against its mining equipment or pledged its Bitcoins for costly loans, and its balance sheet remains healthy to weather this storm. 

HIVE asserts that its low coupon fixed debt, attractive green renewable energy prices, and high-performing energy-efficient ASIC and GPU chips will help it navigate through difficult times.

The company’s President & CEO, Aydin Kilic, stated that HIVE had skillfully navigated the digital asset mining industry in a post-Ethereum merge period when many questioned how it could continue to generate profit from operations. 

He added that the gross mining margins of $3.6 million in this quarter have answered these questions during a time when many other crypto miners are struggling for solvency. 

Additionally, HIVE achieved a gross mining margin of $3.6 million for the quarter, a 77% decrease over the prior quarter of $15.9 million due to the loss of Ethereum revenues from the Merge and lower Bitcoin prices. 

Significantly lower average cryptocurrency prices predominantly drove this decline in gross mining margin during this period, which negatively affected the company, as well as the entire Bitcoin mining industry.

On a relative basis, HIVE has been able to mine with healthy profit margins during periods of market volatility because of being globally diversified and enjoying attractive power costs in Sweden, Iceland, and Quebec. 

Furthermore, the company’s average cost of production per Bitcoin was $13,599 for the quarter ending December 31, 2022, a 37% increase in cost from the previous quarter ending September 30, 2022. 

The company notes that from October 2022 onwards, with Bitcoin mining hash rates and difficulty at all-time highs, it is expected that the cost of production for Bitcoin will increase for the industry at large, as less Bitcoin per Terahash is being rewarded at these difficulty levels.

Related Reading | Coinbase Beats Revenue Expectations; Adds ERC-20 Offering With Euro Coin

Filed Under: News, Bitcoin News Tagged With: Bitcoin Mining, Cryptocurrency, Ethereum (ETH), Hive Blockchain

US States Embrace Bitcoin Mining With New Laws & Regulations

February 13, 2023 by Mishal Ali

As crypto markets face challenges with falling asset values and scandals involving crypto banks, and investment firms, more and more US states are introducing legislation to define, license, and regulate digital assets, including Bitcoin mining.

Bloomberg Tax reported that over 60 legislative proposals are being considered across 25 states, covering various aspects of the complex relationship between the US and blockchain technology, virtual currencies, and non-fungible tokens. 

While some of the measures aim to promote the business climate for digital assets through tax incentives and legal structures, others focus on regulating businesses that invest, trade, or manage such assets.

Bitcoin Mining Tax Credit Bills: The 2023 Legislative Cycle

The current legislative cycle is likely to be shaped by the sharp decline in the value of Bitcoin, with lawmakers and citizens alike becoming increasingly wary of the risks associated with digital assets. 

However, there are also a number of bills with a distinct libertarian flavor, such as the Arizona measure that would treat Bitcoin as legal tender, that is being introduced and could gain traction this year.

New Jersey, in particular, is poised to become the leader in cryptocurrency regulation, with a number of bills currently making their way through the state legislature. 

The Digital Asset and Blockchain Technology Act, for example, would create a comprehensive licensing process for businesses that deal with digital assets while also imposing record-keeping and disclosure duties on brokers, exchanges, and investment firms. 

The bill would also shift regulatory authority from the Department of Banking and Insurance to the New Jersey Bureau of Securities.

In contrast, New York is considering expanding its BitLicense rules and could even ban Bitcoin mining altogether as lawmakers look to protect their citizens from the risks associated with cryptocurrency.

image 42
Source: Bloomberg Tax

 

Despite these challenges, there is still a great deal of optimism for the future of digital assets, with a number of states offering tax incentives and legal structures that encourage the growth of the industry.

Nevertheless, while the cryptocurrency market continues to face a number of challenges, the recent introduction of state legislation could help to establish a safer and more regulated environment for Bitcoin mining in the US. 

As the market continues to evolve, it will be interesting to see how state legislation shapes the future of digital assets in the years to come.

Related Reading | Ethereum NFT Market Takes A 59% Dip: DappRadar Report Unveils 2022 Performance

Filed Under: News, Bitcoin News Tagged With: Bitcoin (BTC), Bitcoin Mining, Blockchain

Bitcoin Miner CleanSpark Shines Despite Hurdles – Strong Q1 Results With 132% Increase

February 10, 2023 by Ammar Raza

America’s Bitcoin Miner, CleanSpark, reported financial results for the first quarter of fiscal 2023. Despite a decrease in revenues and net loss, the company saw significant growth in its Bitcoin mining operations.

Revenue for the quarter was $27.8 million, a 25% decrease from the same period the previous year. The company recorded a net loss of $29.0 million and an Adjusted EBITDA of $1.4 million. However, CleanSpark mined a record-breaking 1,531 Bitcoins, a 132% increase over the prior year.

Our earnings call is about to go live. Just a reminder, we’re a 9/30 year end, so this is our Q1 ‘23 filing. Hope you’ve got a moment to join in and listen. Rough year all over—-@CleanSpark_Inc #bitcoin pic.twitter.com/1uWmZpTLJO

— S Matthew Schultz (@smatthewschultz) February 9, 2023

CEO Zach Bradford said:

We have reliably grown, quarter over quarter, as we execute an operational strategy that we believe makes us one of the fastest growing, most reliable, and most efficient publicly traded bitcoin miners in North America.

CleanSpark’s focus on accretive acquisitions and efficient deployment of capital has positioned the company as a leader in the bitcoin mining industry. 

Despite macroeconomic headwinds, CleanSpark’s average hashrate increased rapidly, outpacing the global hashrate, and the company mined the most BTC ever in a single quarter.

Bradford mentioned that they are starting to reap the benefits of their arduous efforts from the previous quarter, and they anticipate maintaining their progress and achieving their objectives.

As of December 31, 2022, the company’s balance sheet showed $2.1 million in cash, $3.9 million in bitcoin, and a total of $427.0 million in stockholders’ equity. CleanSpark’s debt totaled $19.6 million, but the company paid down $1.6 million, or approximately 8%, in the fourth quarter.

Future Outlook Of The Bitcoin Miner CleanSpark

Despite the challenges faced during the first quarter, CleanSpark remains optimistic about its future growth and profitability. The company’s focus on efficient operations and smart investments has set them apart in the industry and positioned them for continued success.

According to the company’s CFO, Gary A Vecchiarelli:

We have been successful in sourcing and closing transactions which not only grow our percentage of the total global hash rate but also produce meaningful bitcoin and cash flow while still paying down what little debt we have.

Vecchiarelli stated that even though they faced some macroeconomic challenges in the initial quarter, they eagerly look forward to 2023 as a period of steadfast implementation and expansion.

With a per-Bitcoin price of approximately $17,000 at the end of the year, CleanSpark’s cash and bitcoin liquidity was approximately $6.0 million. The company is well-positioned for growth and continues to execute its vision of being a top-five miner in the industry.

Related Reading | Polygon (MATIC) Surges On The Launch Of Virtasy Bollywood NFT Marketplace 

Filed Under: News, Bitcoin News Tagged With: Bitcoin (BTC), Bitcoin Mining, CleanSpark

Marathon Mines Record 687 Bitcoins, Boosts Production By 45%

February 3, 2023 by Ammar Raza

Marathon Digital Holdings, one of the largest Bitcoin miners in North America, announced its record production of 687 Bitcoins in January 2023. The company, which currently holds 11,418 BTC, also sold 1,500 of its holdings during the same month and intended to continue selling a portion of its Bitcoin this year.

Marathon’s Chairman and CEO, Fred Thiel, attributes the improvement in bitcoin production to the successful collaboration with their hosting provider in McCamey, Texas. The new partnership addressed technical issues that suppressed production in Q4 2022. The result is a 45% increase in bitcoin production from December 2022 to January 2023.

image 17

Marathon Sells 1,500 Bitcoin To Strengthen Balance Sheet

However, per the press release, the company’s BTC production has seen a significant surge, with a production of 687 units in January, marking a 49% increase from the previous month’s 462 units. It has resulted in an average daily production of 22.1 units, also a 49% rise from January’s 14.9 units.

Additionally, the operational and energized hash rate (EH/s) has seen a 103% increase, reaching 7.3 in January 2023 compared to 3.6 in January 2022. The installed hash rate (EH/s) has also seen a 206% boost, now standing at 11.0 compared to 3.6 in January 2022.

With more consistent bitcoin production, Marathon decided to sell some of its holdings to cover operating expenses. The sales did not significantly impact the miner’s unrestricted Bitcoin holdings, which increased from 7,815 to 8,090 from December 2022 to January 2023. Marathon ended January 2023 with $133.8 million in available cash on hand.

According to the press release, with production increasing, Marathon aims to focus on energizing more miners and optimizing their performance. The company aims to become one of the largest and most energy-efficient Bitcoin mining operations globally by installing 23 exahashes of computing power by the middle of 2023.

Marathon’s facilities in Garden City, Texas, and Ellendale, North Dakota, are also expected to commence operations in Q1 2023. In January, 2,100 of Marathon’s S19 XPs were energized at the Jamestown facility, increasing the company’s operating fleet to approximately 71,000 BTC servers with a theoretical capacity of 7.3 EH/s as of February 1, 2023.

Recently, Marathon Digital Holdings and FS Innovation, LLC entered into a Shareholders’ Agreement to form an Abu Dhabi Global Markets company to establish and operate one or more mining facilities to expand bitcoin mining operations.

The company’s commitment to strengthening its balance sheet and improving operational efficiency, along with its partnerships and expansions, has placed it in a solid position to achieve its growth and operational targets in 2023.

Related Reading | Solana-based DeFi Withdrew Its App Due To Liquidity Crunch

Filed Under: News, Bitcoin News Tagged With: Bitcoin (BTC), Bitcoin Mining, Marathon

Electricity Crisis Takes A Toll On Bitcoin Mining Industry: A State-by-State Analysis

February 1, 2023 by Mishal Ali

A new report from the Hashrate Index provides insight into how the global energy crisis impacted the Bitcoin mining industry in 2022. With rising electricity prices and declining Bitcoin prices, some of the largest companies in the industry, such as Core Scientific, faced bankruptcy.

According to the report, a severe imbalance in the supply and demand of natural gas is a leading cause of the energy crisis and subsequent electricity price inflation. Natural gas is a crucial source of power for electricity markets, and its flexible nature allows it to adjust to spikes in demand.

image
Source: Hashrate Index

However, with Europe’s reliance on Russia for natural gas, the invasion of Ukraine in 2022 exposed the continent’s vulnerable energy security. As a result, Europe’s use of North American liquified natural gas caused energy price inflation to spread to the US and Canada.

Despite North America’s better energy security, most of the popular US states for Bitcoin mining saw double-digit increases in industrial electricity prices from 2021 to 2022. 

image 1
Source: Hashrate Index

Georgia experienced the largest surge with a 43% jump, which likely contributed to Core Scientific’s downfall. Meanwhile, Texas, home to large mining operations, also saw its electricity prices rise from $61 to $72 per MWh.

The report also revealed a correlation between a state’s electricity generation mix and its change in electricity prices in 2022. Hydro-rich states like Washington, Oregon, Idaho, and Montana were shielded from the worst electricity price increases, while those primarily powered by natural gas saw higher price rises. 

Additionally, the report emphasizes the importance of securing a low, long-term electricity price for the mining business, either through long-term physical or financial hedging or accessing stranded hydropower.

Hydro Power Provides Shield for Bitcoin Miners

States with abundant hydropower and independence from natural gas are less impacted by the global energy crisis, according to the report. In fact, no state powered by more than 40% hydro saw its electricity prices increase by more than 8% in 2022. 

image 3
Source: Hashrate Index

These hydro-rich states offer relatively cheap electricity for Bitcoin miners as long as the hydropower remains stranded or localized.

However, if there is sufficient transmission capacity to transport the excess hydropower to an area with high natural gas prices, customers in that area will bid up the price of the hydropower.

The report highlights the inverse correlation between states’ share of hydropower and their industrial electricity price changes in 2022, indicating that hydro-rich states saw lower electricity price increases. 

image 2
Source: Hashrate Index

On the other hand, the report shows a strong relationship between states’ share of natural gas and their electricity price changes, with natural gas-powered states experiencing higher price rises.

Related Reading | Despite Bitcoin Bull Ride Mass Layoffs in Crypto Land: At Least 2,900 Jobs Lost In January

Filed Under: Bitcoin News, News Tagged With: Bitcoin (BTC), Bitcoin Mining, Core Scientific

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