Bitcoin Mining Energy Consumption Hits Two-Month Low Amid Price Volatility
Bitcoin mining-related energy consumption has reached a two-month low, reflecting the current challenges and adjustments in the mining sector. As reported by S&P Global Commodity Insights, the energy used for mining Bitcoin dropped significantly on May 8, marking the lowest consumption level since March 7. This decline in energy usage coincides with rising power prices that have negatively impacted the profitability of Bitcoin mining operations, according to Spglobal.
The S&P Global Commodity Insights Bitcoin Energy Consumption Index highlighted that on May 8, the network energy consumption was at 916.89 MWh per Bitcoin, totaling 412.6 GWh for the 450 bitcoins mined that day. This figure represents a substantial decrease from the post-halving peak of 1,024 MWh per Bitcoin on April 20. This halving event, which occurred on April 19, effectively reduced the number of bitcoins mined daily from 900 to 450, doubling the break-even costs for miners and significantly impacting profitability.
The profitability of Bitcoin mining is closely tied to both the rewards generated through mining and the costs associated with energy consumption. With the recent halving, the industry expects transaction fees to play a more significant role in compensating for the reduced mining rewards. However, given the early stages of development for layer-2 protocols and ongoing price volatility, the extent to which transaction fees can offset the decrease in mining rewards remains uncertain.
In regions like Finland, the profitability of Bitcoin mining has been particularly challenging. Spikes in power prices have been exacerbated by extended maintenance at the 1.6 GW Olkiluoto-3 reactor and overlapping maintenance at other facilities, pushing day-ahead power prices to three-month highs. The S&P Global Commodity Insights Renewable Bitcoin Quarq Spreads Index estimated that Bitcoin mining profitability in Finland on May 8 was significantly negative.
Conversely, in regions like Sweden and Norway, Bitcoin mining profitability has seen some recovery from the lows of late April, although elevated power prices due to near two-year low hydro stock levels continue to pose challenges. Meanwhile, strong renewable generation and reduced holiday demand in France and Spain have led to comparatively lower power prices in these countries, offering some relief to miners in those markets.
