Bitcoin miners in the far north of Norway and Sweden, where they had been working to avoid excessive electricity bills, have shut down for the winter as energy prices continue to rise.
A short time ago, when European electricity costs were skyrocketing, miners rushed to the continent’s northernmost regions, offering among the world’s lowest power prices because of inexpensive hydroelectric power and little demand. Some even opted for the New World, but are now facing all-time high costs, when demand for heating soars during the winter.
Data from the European power exchange Nordpool reveals that the average energy price in northern Norway in December this year was 18 U.S. cents per kilowatt hour (kWh), over four times the average price of electricity over the preceding three years. The cost of living in Sweden is far higher than in any other developed country.
Denis Rusinovich, the co-founder of CMG Cryptocurrency Mining Group and Maverick Group, said that it was a startling alignment of circumstances that squeezed the only accessible energy excess in northern Norway and Sweden, hence increasing prices.
Low temperatures in late November raised electricity demand, while a distinct lack of wind hampered power generation in Germany, Norway, the U.K., and Sweden. Additionally, delays in scheduled nuclear plant maintenance in France, Sweden, and Finland were exacerbated by pressure on the supply of natural gas brought on by the conflict in Ukraine.
As a result of the price increase, miners shut down their equipment to avoid further increases. Midway through November, according to Rusinovich, several had already closed.
According to Kjetil Pettersen, CEO of Norway-based Kryptovaul, miners there have turned off their miners. Earlier this year, Kryptovault uprooted and moved to a new location in the country’s northern reaches. Electricity costs in the north of Norway will drop again in the first quarter of 2023.
On the other hand, he predicted that electricity costs will remain relatively high in southern Europe through 2023.
Pettersen predicted miners would go dark amid Europe’s current energy crisis voluntarily. Their reserve money and capacity to generate more funds will determine whether or not they can continue without mining earnings.
Iceland was also mentioned by Fiorenzo Manganiello, founder of UAE-based Cowa Energy, as a potential mining destination. “If you need to reimburse capital, you cannot survive more than a couple of months because you need to repay the debt holders,” he added.
Several U.S. mines have collapsed due to excessive use of debt. Companies of considerable size, like Core Scientific (CORZ) and Compute North, have sought and been granted Chapter 11 bankruptcy protection.
Manganiello considers this a perfect time to invest in foreclosed properties. He claims mining properties are presently being offered at a discount of 85–90%. Miners sold facilities without mining equipment during the bull market for $1.5 million per kilowatt. He estimated the current price per M.W. is between $100,000 and $150,000.