The price of Bitcoin has been flat in recent months despite a geopolitical situation in Ukraine that was meant to be the time to shine for decentralized money.
If energy input prices continue to surge at the same pace that they have over the last year, the utility companies that signed those PPAs are incentivized to get out of the contracts to increase their own profit margins.
It was reported at the outset of the Russia and Ukraine war that EU policymakers were set to limit the usage of energy-intensive cryptocurrencies in their MiCA regulations.
EU Parliament member Stefan Berger, who was drafting the regulatory package, said a potential ban on crypto mining would be a death sentence for Bitcoin in the EU.
The decentralized can also count Greenpeace amongst its detractors with the group joining other campaigners for “Change the Code Not The Climate”.
“Bitcoin uses an outdated technology called proof-of-work to validate transactions.
An executive from Ripple has donated $5 million to the campaign but the problem for BTC is that the process is not easy.
Bitcoin as a decentralized currency could actually lose ground to centralized projects in the coming months because of this debate.
In my last article on Bitcoin, I warned that European officials could use Russian sanctions as an excuse to shut down Bitcoin’s presence in the world economy.
“Over time, sanctioned countries could also allocate more resources toward evading sanctions through mining.
President Vladimir Putin had previously said that Russia has a “competitive advantage” in Bitcoin mining.
For Russian miners, the benefits of Bitcoin mining have become strained with the US dollar near six-year highs versus the ruble.
There was further news this week that a Russian Bitcoin miner had been included in the latest round of US sanctions.
Bitriver claims to be the world’s largest hosting provider for climate-friendly crypto mining , and boasts a 100-megawatt data center in the Siberian city of Bratsk which it outsources to foreign miners from the United States and other Western nations.
We’ll probably see short-term volatility but I guess, from this level our view is the next move is indeed higher,” he added.
There is also still no sign of a peace agreement in Russia and the gas supply chain will remain pressured in the months ahead.
Those holdings could be unwound to see it through a period of higher costs.
Interestingly, the company has an ETH mining operation in Sweden which was the country leading the hostility against PoW miners.
Marathon produced a Record 1,259 BTC in Q1 2022, up 556% Year-Over-Year and its total Bitcoin holdings increased to 9,374 BTC.
Marathon had $33 million cost of revenues from $150m in revenues in 2021, so maybe the threat from energy is not existential.
That could be their downfall if legislation impacts the potential for companies to mine, and these companies are at major risk of further downside on BTC.
The mining industry for US-listed miners could benefit from the US sanctions on Russia, but they are aggressively long BTC and should be diversifying some of their stock into other coins.
Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours.