One of the most common narratives in the crypto industry at the moment is that the “winter” is negatively affecting miners.
While it is true that PoW-based chains saw either an exodus of miners or some downsizing, Bitcoin has been a battlefield with hash rates going up without miners capitulating. Some even started liquidating their BTC holdings to cover expenses.
However, falling cryptocurrency prices are not the only reason why the mining sector of the crypto industry is doing worse than ever.
The issue is the rising price of natural gas powering many electrical grids across the world.
Some miners don’t even have access to power
In Kazakhstan, many miners are facing new limitations and regulations from the authorities that are concerned with the strain mining puts on local power grids.
The same is happening in Texas, which is struggling to maintain its power supply during the winter. European miners see electricity price surges as never before.
The ongoing military conflict is driving prices up and creating a very tough market for crypto miners.
Those without access to cheap hydro or solar energy have to pay premiums and receive measly rewards due to falling BTC prices.
While some have enough reserves to keep their BTC positions until the situation in the market improves, many are not so lucky.
Another key factor is the production of electricity and deals with local utility companies.
For example, miners in a rural area of Kenya are providing electricity for locals and investing in infrastructure to receive a significant discount from the government.
Some miners are producing their electricity with solar panels, generators, and other means, making their expenses relatively low compared to the industry’s median.
Bitcoin miners will have to tighten their belts
BitFarms from Canada recently received a warning from Nasdaq. The mining company’s stocks have been traded under $1 for 30 consecutive days.
Now, BitFarms must have 10 consecutive days of trading above $1 before June 12, 2023.
If the market situation won’t improve and prices on natural gas won’t go down, companies like BitFarms will be done for.