EIA to Survey Crypto Miners About Their Energy Consumption

Investing.com – Although the start of 2024 feels like a distant past, a significant 20% drop in the price of Bitcoin since the conference in Nashville exacerbates this sentiment.

According to a research report from BTIG released on Tuesday, the primary insight from Bitcoin 2024 is the ongoing expansion of the ecosystem and the increasing demand for electricity to sustain it. The report indicates that competition for power resources is likely to intensify in the coming years.

Mergers and acquisitions were prominent topics at Bitcoin 2024, particularly among mining entities. BTIG analysts observed that after the halving, many Bitcoin mining operations are struggling with insufficient capacity and capital to expand effectively.

The recent decline in Bitcoin prices to the low $50,000 range has rendered mining with older models, such as the S19 J Pro+, more difficult. BTIG stated, “We believe that a prolonged Bitcoin price range in the low $50k range could compel some smaller miners to consider merging with larger, established miners.”

As it stands, the price of Bitcoin hovers around $53,000. This translates to a spread of $0.03–$0.04 per kWh for the newest mining equipment, assuming an electricity price of $0.05 per kWh. The report also highlights that the average global hash rate for August is approximately 662 EH, marking an 8% increase month-over-month and a 50% rise compared to October 2023. This data underscores the mounting challenges in mining economics for older models, where revenue from Bitcoin on a per kWh basis approximately matches a power price of $0.05 per kWh.

In corporate news, Riot Platforms has acquired Block Mining for about $125 million, granting the crypto miner immediate access to 60 MW of capacity across two sites in Kentucky, which is projected to expand to 110 MW by year-end and 305 MW by the end of 2025.

BTIG mentioned, “This acquisition diversifies RIOT’s operations beyond Texas and positions them for a total capacity of 2 GW, including 1.7 GW in Texas and 0.3 GW in Kentucky.” They also noted, “We expect larger miners with available capital to continue consolidating the US Bitcoin mining market.”

Cleanspark has similarly acquired GRIID, marking an expansion into Tennessee. BTIG pointed out that this consolidation trend stems from the necessity for scale and efficiency in a growingly competitive industry.

Additionally, the Energy Information Administration (EIA) has announced plans for a second attempt to survey the Bitcoin mining sector regarding their energy consumption, following an initial effort in February. Preliminary findings indicated that cryptocurrency mining accounts for 0.6%-2.3% of total US electricity use. BTIG observed, “This announcement comes alongside Dominion Energy’s statement that it may need to construct up to eight peaker plants over the next 10-15 years to accommodate the rising energy demand from data centers.”

BTIG has also revised its forecasts for Riot Platforms and Marathon Digital after their 2Q24 earnings reports. For 2024 and 2025, BTIG projects revenues for RIOT to be around $368 million and $617 million, respectively, while for MARA, projections are $613 million and $744 million. Furthermore, BTIG’s estimates for Bitcoin prices are set at an average of $62,000 for 2024 and $72,000 for 2025.

BTIG analysts stated, “We anticipate a continued upward trend in Bitcoin prices, which would enhance miners’ profit margins.”