Energy Costs are Rising, while Bitcoin's Price is Falling

Bitcoin miners are struggling to stay profitable as energy prices rise and crypto prices fall, threatening the viability of some major players. Analysts told Insider that publicly traded companies are selling their mined tokens at a deep discount to repay bitcoin-backed loans and cover rising operating costs, which could eventually lead to liquidations in the troubled sector.

Electricity prices are rising globally, owing in part to higher natural gas and coal prices as a result of Russia's war on Ukraine, and the EIA predicts that prices in the United States will rise 5% this summer.

At the same time, bitcoin has dropped nearly 70% from its all-time high in November to hover around $21,000. These pressures have weighed heavily on the profitability of crypto mining companies. To "mine" the tokens, they use rigs of carbon-generating supercomputers, which consume a lot of energy.

"Utilities make up around 79% of bitcoin miners' operating costs. They're essentially facing rising costs and a steep decline in revenue," Alexander Neumueller, the project lead for Cambridge University's Bitcoin Electricity Consumption Index, told Insider.