Energy problems in Europe and North America have spelled another bleak quarter for Bitcoin miners on both continents. Prevailing market conditions mean low hash prices also did the same work for Bitcoin miners. According to the latest Hashrate Index report, several factors have led to a significantly lower hash price and higher cost to mint one BTC.
A hash price is a measure that the industry uses to determine the market value per unit of hashing power. In this measure, we divide the dollar per terahash per second per day, which changes by changing in mining difficulty and the price of BTC.
According to the Hashrate Index report, in the middle of Q3, Bitcoin’s hash price was afforded some reprieve as heat waves during the American summer led to a drop in hash rate. This hash rate corresponded with a slight BTC price recovery.
However, in September, the price of Bitcoin dropped below $20,000 while hash rates climbed to new all-time highs, due to which the hash price slipped closer to all-time lows. When the energy costs raised in North America and Europe, then the profit margins of miners were further threatened. The reason behind high energy prices was mismanaged renewable energy policies and Russia’s war with Ukraine.
In July 2022, the average cost of industrial electricity increased by 25% from $75.20 a megawatt hour to $94.30 per megawatt hour, which gave birth to difficulties for miners in this continent. Not only have cryptocurrency miners been affected by these high energy prices, but hosting service providers have also been affected by this.
With these high energy costs, Publicly-traded mining firms have also faced increasing pressure with increasing interest rates. The firms also faced greater difficulty acquiring lines of credit which led some firms to turn to equity fundraising.