Bitcoin Mining Disrupted by U.S. Cold Wave as Power Demand Surges [Bitcoin Now]

Bitcoin Mining Output Plummets Amid Record Cold Wave
Hash Rates Drop Sharply at U.S. Miners "FoundryUSA" and "Luxor"
Bloomberg: "Overseas Companies Expected to Benefit"

Bitcoin mining companies across the United States are experiencing a decline in mining output due to the severe cold wave sweeping the country. The surge in electricity demand appears to have prompted mining firms to slow down their operations.

According to MiningPoolStats, a mining pool statistics website, the hash rate of FoundryUSA, a major U.S.-based Bitcoin mining company, dropped from 300 EH/s (exahashes per second) on January 23 to around 200 EH/s on January 27. Luxor also saw its hash rate fall from 40 EH/s to 20 EH/s during the same period.

The hash rate refers to the computational power used to process transactions on the Bitcoin blockchain. A higher figure indicates that more mining machines are operating, while a lower figure means that fewer are in use.

This decline is believed to be the result of the recent cold snap that has gripped the United States. The extreme cold has caused a sharp increase in demand for heating electricity, putting additional strain on industrial power supplies. As a result, the expansion of electricity demand and rising energy prices have undermined mining profitability, leading some mining companies to reduce or temporarily halt operations in order to ease the burden on the power grid.

Ethan Vera, Chief Operating Officer of Seattle-based Luxor, told Bloomberg, "Advanced Bitcoin mining companies are adjusting the speed of their mining machines on a second-by-second basis by comprehensively considering electricity prices, grid compensation, and mining revenue." Bloomberg also reported that as U.S. mining companies scale back operations, overseas mining firms appear to be benefiting from reduced competition.

Additionally, on January 26 (local time), Oregon-based Bitcoin mining company Abundant Mines stated on X (formerly Twitter) that "the most likely cause is the winter storm that hit Texas and the southeastern United States." The company explained, "This region accounts for a significant portion of Bitcoin mining in the U.S., and many mining companies have suspended operations due to power outages and voluntary measures to stabilize the power grid."

The market believes that the decline in hash rate is partly due to reduced mining profitability resulting from Bitcoin price adjustments. According to blockchain analytics platform CryptoQuant, the price of Bitcoin dropped from $93,651 on January 6 to $88,284 on January 26. During the same period, the hash rate also fell from 958 EH/s to 873 EH/s.

The recent weakness in Bitcoin prices is attributed to a combination of factors, including the possibility of a U.S. federal government shutdown, delays in passing the Clarity Act-a bill aimed at regulating the virtual asset market-and global geopolitical uncertainties. In addition, the increased cost of electricity due to the cold wave has further impacted some mining companies, leading to reduced operations and, consequently, a decline in the hash rate.

Industry experts are also noting that this drop in hash rate could increase Bitcoin price volatility in the short term. Abundant Mines explained, "Sharp fluctuations in the hash rate can lead to greater price volatility."

The United States is considered the largest Bitcoin mining hub in the world. Following the Chinese government's crackdown on mining, the U.S. has emerged as the global leader in Bitcoin mining.