"Oil price shock has limited direct impact on Bitcoin (BTC) mining costs"

JH Kim

Summary

Luxor said the direct impact of a sharp rise in oil prices on Bitcoin mining costs is limited.
It said only about 8–10% of the global Bitcoin hashrate operates in power markets closely tied to crude oil prices.
It analyzed that if oil prices exceed $100 per barrel, Bitcoin price fluctuations stemming from a macroeconomic shock could have a bigger impact on the mining industry than electricity rates.

Forecast Trend Report by Period

A new analysis suggests that the direct impact of a sharp rise in oil prices on Bitcoin (BTC) mining costs is limited.

According to CoinDesk, a crypto-focused media outlet, Luxor, a Bitcoin mining software and services company, said in a report that only about 8–10% of the global Bitcoin hashrate operates in power markets closely tied to crude oil prices.

That mining activity is concentrated mainly in Gulf countries such as the United Arab Emirates and Oman, where regional grids use natural gas obtained during oil production as an energy source.

By contrast, the remaining roughly 90% of mining operates in power markets based on natural gas, coal, hydropower or nuclear energy, meaning fluctuations in crude oil prices do not have a large direct effect on mining costs, it said.

However, Luxor analyzed that if oil prices exceed $100 per barrel due to a geopolitical shock, Bitcoin price swings driven by the macroeconomic shock could have a bigger impact on the mining industry than electricity rates.