Bitcoin mining energy consumption drops to two-month low

Bitcoin mining-related energy consumption dropped to a two-month low May 8 as rising power prices squeezed profitability.

S&P Global Commodity Insights Bitcoin Energy Consumption Index estimated network energy consumption at 916.89 MWh/bitcoin May 8, or 412.6 GWh for a total of 450 bitcoin mined on the day, the lowest level since March 7, and down from the "post-halving" peak of 1,024 MWh/bitcoin April 20.

Bitcoin mining activity is yet to recover from a doubling of break-even costs on April 19, when the fourth "halving" took place.

Bitcoin halving occurs every four years, when bitcoin to be mined reduces by half. A total of 450 bitcoin can be mined daily over the next four years, before the next halving event.

As bitcoin mining rewards reduce over the long term, transaction fees are expected to become a larger portion of bitcoin mining profitability.

With the recent volatility in bitcoin price and layer-2 protocols only in the early stages of development, however, it is unclear to what extent transaction fees will impact mining rewards in the short and medium terms.

A drop in bitcoin energy consumption indicates some miners have opted out from participating, potentially leading to a drop in power prices and resumption of mining profitability.

The Bitcoin Energy Consumption Index shows the energy consumption per bitcoin mined using the standard graphic card Antminer S19 Pro, which has an average 110 TeraHashes per second (TH/s), consuming 3.25 kilowatts.

In the Nordics, bitcoin mining profitability in Finland has been out-of-the-money as power prices spiked on the extension of the annual maintenance of the 1.6 GW Olkiluoto-3 reactor by another week.

The delay at Olkiluoto-3 overlapped with annual maintenance at the Olkiluoto-2 and 1 reactos, with Finish day-ahead power for May 8 registering a three-month high at Eur136.24/MWh.

S&P Global Commodity Insights Renewable Bitcoin Quarq Spreads Index estimated the bitcoin mining profitability in Finland for May 8 at minus 79.56/MWh, below the May 2 spread at minus 74.42/MWh.

Renewable Bitcoin Quarq Spread Index presents the bitcoin mining profitability on a grid-based delivered electricity accounting for renewable certificates for both the US and Europe, across 43 regions.

Bitcoin mining profitability has recovered from late April for both Sweden SE1 and Norway NO4 regions, although Nordic hydro stock levels were registered at almost two-year lows May 1, keeping power prices in the region elevated.

Strong renewable generation and subdued holiday demand both in France and Spain have supported the discount of the two power markets to the Nordic region.

Platts assessed Nordic Hydro GOs for current year vintage at Eur1/MWh May 8, meanwhile Platts-Pexapark Power Purchasing Agreement daily indices (3Pi) for Spanish solar was at Eur32.86/MWh.

Platts is a part of S&P Global Commodity Insights.