Electricity Worth More than Bitcoin Mining!

Dimming bitcoin profits shift bitcoin mining company towards the electric grid

Coal ash pit with the reflection of electric utility lines

On August 22, 2022, reporter Anya Litvak published a story in the Pittsburgh Post-Gazette about the changing fortunes of a local bitcoin mining company whose stock has dropped over 90-percent in the past 10 months. The company burns waste coal to produce electricity, and they found that the Bitcoin plunge from $67K in November to $21K in August, made it more worthwhile for them to sell the electricity, than to use it to power bitcoin mining computers. In the meantime, they’ve slashed the size of their bitcoin miner fleet by 26,000 machines. Now this…

Last week, Stronghold, along with three other publicly traded firms, received letters from the chairs of the U.S. House Committee on Energy and Commerce wondering if the plants shouldn’t just go away. Burning waste coal produces more carbon dioxide emissions per unit of energy than burning regular coal. “Given the existential threat posed by the climate crisis, we are deeply concerned about efforts that extend the operational life of aging coal power plants and leads to increased GHG pollution,” the letter reads.

Dimming bitcoin profits shift Stronghold Mining towards the electric grid‘ | by Anya Litvak | Pittsburgh Post-Gazette

We’re seeing these sorts of developments not only from the ‘crypto winter,’ but also from skyrocketing natural gas commodity prices that hover near the $10 mark, spiking the price of natural gas for heating AND electricity generation.

Exports of LNG have made the situation worse, with only a limited period of relief from the Freeport LNG plant outage. Prices are expected to rise again this fall and winter, once that LNG plant is back online.

Meantime, US winter storage of natural gas is 12-percent below normal levels, fueling widespread concerns for runaway gas price increases, during the winter of 2022-23.

Daily U.S. electricity generation from natural gas hit a record in mid-July

U.S. Energy Information Administration | August 23, 2022

In the U.S. Lower 48 states, electric power generated by natural gas-fired power plants reached 6.37 million megawatthours on July 21, 2022, according to our Hourly Electric Grid Monitor. Despite relatively high natural gas prices, demand for natural gas for electricity generation has been strong throughout July as a result of above-normal temperaturesreduced coal-fired electricity generation, and recent natural gas-fired capacity additions.

U.S. electricity demand usually peaks in the summer because of demand for air conditioning. This past July was especially hot, ranking as the third hottest on record in the United States. Before this year, the previous daily peak for natural gas-fired electricity generation had occurred on July 27, 2020, when natural gas prices were historically low.

In July 2020, the Henry Hub natural gas price averaged $1.77 per million British thermal units (MMBtu). This July, the natural gas price averaged $7.28/MMBtu. Typically, higher natural gas prices reduce natural gas price competitiveness relative to other sources, especially coal.

This summer, coal-fired power plants have not been used as much as in prior summers. Continued retirements of coal-fired generating plants, relatively high coal prices, and lower-than-average coal stocks at power plants have limited coal consumption. In May, coal inventories at power plants averaged 20% lower than the prior-year levels.

New capacity has increased the availability and use of natural gas-fired electricity. Over the past 10 years, developers have added about 62 gigawatts of combined-cycle gas turbine capacity. The increased number of combined-cycle gas turbines in use has led to efficiency gains and less conversion losses, which means more electricity can be generated from the same amount of natural gas.

Principal contributors: Kirby Lawrence, Max Ober


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