The BitcoinComputing Power dropped by about 1/3, and behind it was the pot of extreme weather

Original | Odaily Planet Daily

Author | loopy

In recent days, BitcoinMiningComputing Power has been declining rapidly. At the moment, BitcoinMiningComputing Power is hovering around 440 EH/s, while the lowest fell to about 414 EH/s. Over the past few days, BitcoinComputing Power has fallen by about a third from its recent high.

(Image source: Coinwarz)

And for industry participants, how will the decline in Computing Power affect the crypto market (Bitcoin cost price)?

A cold wave hits the United States, and energy shortages endanger Miners

On January 15, the Electric Reliability Council of Texas (ERCOT) issued a public warning that low levels of power supply are expected due to persistently cold temperatures, record-breaking power demand, and unusual winds. ERCOT is asking Texas businesses and residents to conserve electricity when it is safe to do so. At the same time, they issued a warning that there could be a localized power outage.

The occurrence of extreme weather poses a test to the power grid. Under the low temperatures, the shortage of supply and the surge in demand have driven up the price of electricity.

According to LSEG, the price of electricity will jump from about $35 per megawatt-hour (MWh) to a maximum of about $158 during the cold spell, according to the electric utility PJM West Hub. Electricity prices will hit their highest level since December 2022.

High electricity prices have also caused BitcoinMining costs to skyrocket. At present, the United States is the most concentrated and densely populated BitcoinComputing Power region in the world. Therefore, the fluctuation in electricity prices caused by this cold wave has greatly affected the production of Miners.

In the case of Foundry USA, the largest mining pool in the United States, the hashrate of the mining pool dropped from about 150 EH/s on weekdays to a minimum of 77 EH/s. Luxor, a mining company also based in the United States, has also been affected.

The impact of this cold wave is most serious in Texas (a major crypto mining town). Marathon Digital, a well-known crypto miner, has also experienced a decline in computing power.

Marathon Digital executives told the media that many miners have now shut down some of their mining rigs to cut operating costs, “A large number of miners in Texas, including Marathon, have reduced their operations in the past few days, and we have reduced our electricity consumption to support the Texas grid and residential power during the current cold wave.” In times of crisis, the energy load of Texas Miners can be released in a matter of minutes, freeing up energy for others. And that’s what we’ve seen in the last few days. ”

This is not the first time this has happened, as it is the highest next-day price for electricity at PJM West Hub since December 2022, when it reached as high as $179 per megawatt hour. For reference, the average price in 2023 is $37 and $42 from 2018 to 2022.

TheMinerMag reports that the Miner’s retreat released about 4 gigawatts of electricity.

2022 Cold Wave Returns? Are Miners Okay?

In December 2022, a massive cold spell called “Elliott” pushed natural gas use to an all-time high and caused the collapse of some electric and gas systems in the eastern half of the United States. The resulting shutdown of dozens of power plants and record power levels once jeopardized Bitcoin mining across the United States.

At that time, Texas electricity bills soared by more than 400%. At the end of December, the BTC Computing Power fell to 156 EH/s, Computing Power the lowest of the year.

And the resurgence of this year’s cold wave reminds people of that winter dominated by cold.

If we look at a larger time frame, Miners’ returns are indeed gradually declining as the ETF effect disappears.

Miners’ Hash Rate Value, the dollar yield per unit of Computing Power produced, has fallen by about 30% over the past month.

The inscription boom brought about by BRC-20 once brought extremely high fee income to Miners. At present, the high popularity of inscriptions has come to an end, and miner fees are also dropping.

BTC.com data shows that the handling fee of the whole network Bitcoin yesterday was about 104.6 BTC, a decrease of about 52% from three days ago (219 BTC).

With the drop of Computing Power, the BTC Mining Difficulty will also usher in a rare downward revision. BTC.com data shows that the difficulty of the entire Bitcoin network is currently 73.2 T, and it is expected that the next adjustment will be made in 2 days, and the forecast will be adjusted to 70.92 T.

Although the attack of this snowstorm is only a short-term impact. However, as the BitcoinHalving cycle approaches, the pressure on mining companies and Miner will further increase. The Halving is currently less than 100 days away, and the average production cost per Bitcoin after the Halving is expected to be $37, 856. Most miners will be challenged with the cost of sales and administrative expenses, with an expected break-even point of around $40,000.

Judging from the current currency price and market expectations, there is no pressure on the profitability of mining companies, but the decline in profit margins may be inevitable.