EIA to survey crypto miners on their energy use - BTIG

Investing.com -- While Bitcoin 2024 was less than two weeks ago, the 20% drop in the original cryptocurrency’s price since the conference in Nashville makes it feel like a distant memory. 

BTIG said in a research report on Tuesday that the biggest takeaway from Bitcoin 2024 was the continued expansion of the ecosystem and the growing demand for electricity to support it. They noted that competition for power is expected to increase over the next few years.

Mergers and acquisitions were also a major theme at Bitcoin 2024, particularly among miners. BTIG analysts noted that post-halving, some Bitcoin mining operations lack the capacity and capital to scale their businesses. 

The recent drop in Bitcoin prices into the low $50,000 range has made mining with older models, such as the S19 J Pro+, a challenging route. BTIG stated, "We believe that a prolonged Bitcoin price range in the low $50k range could force some smaller miners to look to merge with larger established miners."

Currently, the Bitcoin price is around $53,000, which translates to a $0.03-$0.04/kWh spread for the latest mining equipment, assuming a power price of $0.05/kWh. The report further details that the global hash rate's August average month-to-date is about 662 EH, up 8% month-over-month and 50% from October 2023. This points to increasingly challenging mining economics for older models, where Bitcoin price revenue on a $/kWh basis roughly equals a $0.05/kWh power price.

Meanwhile, Riot Platforms (NASDAQ:RIOT ) has acquired Block Mining for roughly $125 million, providing the crypto miner with immediate access to 60MW of capacity across two sites in Kentucky, expected to scale to 110MW by year-end and 305MW by the end of 2025. 

BTIG commented, "This acquisition diversifies RIOT's operations out of Texas and paves the way for RIOT to have 2GW of capacity, with 1.7GW in Texas and 0.3GW in Kentucky." They added, "We expect larger miners with access to capital to continue to consolidate the US Bitcoin mining market."

Cleanspark (NASDAQ:CLSK ) also acquired GRIID, expanding its presence into Tennessee. BTIG observed, "The consolidation phase is driven by the need for scale and efficiency in an increasingly competitive landscape."

Elsewhere, the Energy Information Administration (EIA) announced a planned second attempt to survey the Bitcoin mining industry on their energy use, following an initial attempt in February. Preliminary analysis pointed to cryptocurrency mining consuming 0.6%-2.3% of total US electricity. BTIG noted, "The announcement comes amid Dominion Energy (NYSE:D )'s statement that it may need to build up to eight natural gas peaker plants over the next 10-15 years to meet growing power demand from data centers." 

BTIG updated their forecasts for Riot Platforms and Marathon Digital (NASDAQ:MARA ) following their 2Q24 earnings. For 2024 and 2025, BTIG's revenue targets for RIOT are roughly $368 million and $617 million, respectively, and for MARA, $613 million and $744 million. BTIG's Bitcoin price estimates for 2024 and 2025 are $62,000 and $72,000 on average, respectively. 

"We assume a continued upward trajectory in Bitcoin prices, providing a boost to miners' margins," BTIG analysts stated.

Source: Investing.com