Bitcoin price recovery bound to be delayed as Texas power crisis threatens miner reserves

Bitcoin mining may not sound like a care-intensive process, but it certainly is an energy-intensive process. The need for a power supply to validate the blocks has raised concerns in the past surrounding its impact on the resources. But the consequences of the same are now also impacting the BTC miners.

Bitcoin mining in Texas in trouble

Bitcoin miners in the state of Texas are shutting down their machines as the state continues to struggle with its power crisis. The low energy costs and relatively loose regulation made Texas one of the topmost destinations for BTC miners. The place also houses some of the biggest Bitcoin mining companies in the world’s facilities, like Riot and Marathon Digital.

However, due to extreme weather in the past few years, the power crisis is only getting worse in the state, reaching the point where the Biden Administration declared a power emergency in the state this week. Lee Bratcher, president of the Texas Blockchain Council, said,

“We have consistently been seeing 90% plus curtailment of Bitcoin mining each day this week that power conditions tightened. The power that is not off is most power to the office buildings and backup systems that are on site and not the machines themselves.”

Consequently, all the industrial-scale Bitcoin miners are now shutting down their machines, sticking with the rules. As is the low BTC prices, increasing competition and declining rewards following the next halving are major concerns for miners, and the power crisis would only add to it.

Impact on Bitcoin

When it comes to the contribution of Texas to the BTC mining industry, the state does not stand much behind it. Texas houses the facilities of AntPool, the second biggest Bitcoin mining pool, contributing to about 22.27% of the entire Hash Power. Shuttering of mining in the state would certainly impact this pool, consequently impacting the Hash Rate.

Although there is no historical evidence of a price decline associated with a fall in the Hash Rate, Bitcoin takes a hit when miners compensate for their losses. Since such a power crisis would necessitate the shuttering of mining, miners would be forced to sell their holdings to pay their bills. 

The only way to do this would be by pulling BTC out of the miner reserves, and heavy selling would naturally make a bearish impact on the cryptocurrency’s price. Miner selling has been associated with sudden price crashes, an instance of which is the crash of August end. Following a price rise, miners sold close to 4,900 BTC worth close to $126 million. 

Bitcoin miner reserves

The very next day, Bitcoin price crashed and has since been hovering around $25,700. Thus, the biggest cryptocurrency in the world might invite its own doom if the power crisis does not come to an end.