On May 27, 2020, the Greek-British crypto advocate Andreas Antonopoulos featured in a new YouTube segment titled “Down the Rabbit Hole” where he remarked that US-based bitcoin miners might soon become more profitable thanks to plummeting oil prices.
Antonopoulos argued that the surplus in oil markets amidst falling demand due to the current global lockdown might create a competitive edge for bitcoin mining in the US as American mining rigs become more profitable due to lower energy costs.
Antonopoulos also said that widespread access to the most recent ASIC miners, such as the recently launched Antminer T19, has levelled the playing field in terms of mining competitiveness. Thus access to cheap electricity will factor in more in determining which miners are most profitable.
Bitmain’s Texas-based Mining Firm To Benefit Most
On April 20, 2020, oil prices fell to negative for the first time in history, indirectly creating a market panic on other major commodities such as stocks.
However, due to the nature of bitcoin’s incompatibility with oil, the market did not face any hiccups, as the digital coin regained its reputation as a safe haven asset.
Now, Antonopoulos makes the argument that Bitmain’s newly opened mining farm in the US state of Texas stands to gain the most from the drop in oil prices, as the U.S which produces around 12,000 barrels per day is the largest oil producer in the world.
Therefore, there may be really good opportunities for cheap power which would suddenly make US-based miners much, much more competitive and profitable than those based in other coal-driven economies.
On the contrary, coal energy largely determines China’s cost of electricity. In general, the cost of electricity in the US has decreased at a faster rate than that of China. Thus, it is clear that the reduction in the unit cost of electricity due to the decrease in oil prices has been felt globally, but not at an equal magnitude.
Therefore, Antonopoulos notes that most regions outside of coal-driven economies such as China will benefit more from the decrease in the unit cost of electricity caused by the decline in oil prices.
Dropping Oil Prices Will Benefit Chinese Miners Too
China is the largest global player in bitcoin mining, with more than 66% of the global hash rate originating from the Asian country.
While most Chinese mining farms are driven by coal energy, Antonopolous is certain that they too will look to profit from dropping oil prices.
He argued that although Chinese energy producers are not currently reliant on oil, they will most likely turn to oil and other renewable energy sources to bring their costs down and remain competitive.
