Bitcoin miners, who have been battered by the recent bear market and high energy prices for months, are finally getting some relief thanks to natural gas prices that have fallen about 75% since August. Crypto prices, meanwhile have rebounded.
Miners use copious amounts of energy, and their profitability greatly depends on their ability to consistently source cheap power. Many industrial-scale miners rely on power grids that generate electricity using natural gas, and don’t have fixed-rate energy purchase agreements, exposing them to the whims of energy markets.
“2022 proved how vulnerable those miners are to global fuel price inflation,” said Jaran Mellerud, analyst at mining services firm Luxor Technologies.
Many of these miners suffered heavy losses because natural gas prices soared on sanctions imposed on Russia after last year’s invasion of Ukraine, plus the price of bitcoin plummeting in 2022, hitting a two-year low in November.