Texas energy crisis hits Bitcoin mining

Rania Gule

Given the unprecedented shifts in the cryptocurrency market, the trading volume of Bitcoin has significantly dropped to less than $5 billion, raising questions about what is happening in the crypto markets. As trading began on Monday, the price of Bitcoin stood at $25,770, reflecting a slight decrease of less than 0.10%, and there are several contributing factors to this.

Firstly, I believe the ongoing energy crisis in Texas has affected Bitcoin’s mining reserves, leading to reduced confidence in Bitcoin’s price recovery, especially after a federal official indicated that the final decision regarding cryptocurrency remains uncertain over the weekend.

On the other hand, the banking giant JPMorgan has made significant strides in this field by launching a blockchain-based token aimed at speeding up payment processes. This highlights the continually evolving nature of cryptocurrency markets.

Currently, the BTC/USD price is declining due to the ongoing energy crisis in Texas. Bitcoin’s recovery, stabilizing between $25,500 and $26,000, has halted for three weeks now with no signs of improvement. Texas, a major Bitcoin mining hub, is experiencing a significant drop in energy supply due to severe weather conditions, leading to mining farms’ closures. This energy crisis threatens the network’s hashing power, particularly impacting AntPool, a major contributor responsible for about 22.27% of Hash Power. Intensive selling by mining companies to cover expenses during this crisis could exert strong downward pressure on Bitcoin prices, as we witnessed in August.

While the Federal Reserve actively investigates developments in electronic exchange platforms, blockchain technology, and digital assets like cryptocurrencies and stablecoins, this differs from deciding on the next steps in full-scale payment system development. Issuing a central bank digital currency requires clear support from the executive branch and authorization from the US Congress, making any decision in this regard extremely challenging. This underscores the caution of US officials when it comes to digital currencies.

On the other hand, JPMorgan Chase and its counterparts are taking significant steps in the blockchain technology world by unveiling digital depositary receipts based on this system, designed to enhance global payments and settlements. These digital depositary receipts represent customer deposits in commercial banks and aim to expedite transactions while reducing associated costs through blockchain system efficiency. However, I believe regulatory approval will remain a significant hurdle to their adoption.

In my opinion, the adoption of such technologies in large organizations and banks is sure to pose a threat to well-known cryptocurrencies like Bitcoin, which may be the underlying reason for the decline in Bitcoin and digital currency prices today.