Highlights

Bitcoin mining-related energy consumption dropped to a two-month low on May 8, as rising power prices squeezed profitability. The S&P Global Commodity Insights Bitcoin Energy Consumption Index estimated network energy consumption at 916.89 MWh/bitcoin on May 8, the lowest level since March 7. This drop in energy consumption can be attributed to some miners opting out of participating in mining activities.

The recent volatility in bitcoin price and the early stages of development of layer-2 protocols have made it unclear how transaction fees will impact mining rewards in the short and medium terms. As bitcoin mining rewards reduce over time, transaction fees are expected to become a larger portion of mining profitability.

In Finland, bitcoin mining profitability has been out-of-the-money due to a spike in power prices caused by the extension of the annual maintenance of the Olkiluoto-3 reactor. The delay in maintenance overlapped with maintenance at other reactors, leading to a three-month high in day-ahead power prices on May 8.

On the other hand, bitcoin mining profitability has recovered in Sweden and Norway regions, despite low Nordic hydro stock levels. Strong renewable generation and subdued holiday demand in France and Spain have supported discounted power prices in those regions compared to the Nordic region.

Overall, the dynamics of bitcoin mining profitability are influenced by various factors such as power prices, maintenance schedules, and renewable energy generation. As the industry continues to evolve, miners will need to adapt to changing market conditions to remain profitable.