Energy Shock: How the Strait of Hormuz Crisis Could Reshape Bitcoin Mining Economics

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Energy Shock: How the Strait of Hormuz Crisis Could Reshape <a href="https://minority-mindset.com/btc-usd/">Bitcoin</a> Mining Economics

Bitcoin miners and mining in general are in trouble.

The price of Brent crude oil has surged past $113 a barrel following former President Trump’s strong warning to Iran. This is causing energy costs to rise sharply, and Bitcoin miners are particularly vulnerable. Currently, it costs around $88,000 to produce a single Bitcoin, while the current market price is only about $69,200. This already presents a financial challenge for miners, and the increasing cost of energy is making the situation even more difficult.

Electricity is the biggest expense for Bitcoin miners, making up 60 to 80% of their costs. Because electricity prices often rise when oil prices go up, increases in energy costs make it harder for miners to profit. Essentially, when energy gets more expensive, the price of Bitcoin needs to be higher for miners to stay in business.

Marginal miners are running out of runway.

EXPLORE: BTC Price Risk from Oil Spike

The Hormuz Premium: Energy Cost Transmission to Mining Economics

Call it the Hormuz Premium.

Power costs for industries in major mining areas, such as Texas, rely heavily on natural gas, and the price of natural gas usually rises when oil supplies are disrupted. Goldman Sachs now predicts an average oil price of $110 a barrel, and it could even reach over $147 if shipping problems continue. This means that every dollar increase in oil prices translates directly into higher electricity bills.

As a researcher tracking the mining industry, I’ve observed that miners were already facing significant financial pressures before the recent difficulties. Even before the escalation, the average mining operation was operating at a 21% loss. Now, a relatively small increase of 1.5 cents per kilowatt-hour in electricity costs can make even efficient machines like the Antminer S19j Pro unprofitable. For older S19 series hardware, it’s even worse – unless a facility has a fixed-rate electricity contract, it’s simply not mathematically viable to keep them running.

Spain is calling for the Strait of Hormuz to remain open and for all energy facilities in the Middle East to be protected.

The world is at a critical moment. If things get worse, we could face a lasting energy crisis that affects everyone.

The world should not pay the consequences of…

— Pedro Sánchez (@sanchezcastejon) March 22, 2026

This isn’t simply about miners losing money; they’re facing a risk of becoming unable to pay their bills. Their only choice is often to sell their Bitcoin, which adds to the market’s instability at a particularly bad moment.

The recent downturn is dividing the mining industry. Miners who rely on the traditional power grid, particularly those in competitive markets like the US and Europe, are feeling the biggest impact. To avoid losing money, they may have to temporarily reduce operations during peak energy times or even shut down completely.

Bitcoin miners who can access cheap, renewable energy sources – like those found in Iceland, Quebec, or Scandinavia – are in a strong position and are likely to stay competitive. Experts believe that if oil prices remain high, around 10-15% of the total Bitcoin mining power worldwide will have to shut down, hitting those miners who rely on expensive, fossil fuel-based energy the hardest.

If the price of oil stays above $115 a barrel, computing power will shift to more efficient sources. This will force less effective operations to shut down. The result will be a more streamlined and cost-effective network, but it will take a significant and difficult downturn to get there.

EXPLORE: Iran War Impact on Bitcoin Infrastructure

Sovereign Energy Security: The New Competitive Moat

Hardware efficiency used to be the moat. The Hormuz crisis just changed that.

Having your own reliable energy source is becoming a major advantage for countries. Traditional energy pricing has proven to be risky, so investors are now focusing on nations that control their own energy production or are shielded from global markets. Examples include Bhutan, El Salvador, and systems that use locally-sourced gas, separate from international exports.

Access to affordable energy is now about more than just expense; it’s a significant risk factor. Bitcoin miners relying on traditional power grids are vulnerable to sudden, dramatic increases in operating costs if there’s a global event impacting energy supplies. However, operations powered by on-site sources like flared gas or small-scale hydro are shielded from these risks, maintaining stable costs while their competitors struggle.

Rising energy costs are immediately impacting Bitcoin prices. When miners face financial pressures due to these costs, they often sell their Bitcoin holdings, adding to the selling pressure in an already volatile market affected by global events. Data from Santiment shows this pattern consistently – miner Bitcoin balances decrease whenever energy prices jump. While new investments from ETFs are helping to offset some of this selling, they aren’t fully absorbing the impact.

Bitcoin’s processing power (hash rate) has dropped significantly – about 40% from its all-time high. This is the largest sell-off by miners since 2021, and it suggests some major mining operations are leaving the cryptocurrency space, likely due to falling energy prices making it less profitable.

— Charles Edwards (@caprioleio) January 29, 2026

There’s a positive side to the current situation: historically, when miners give up, it often signals the lowest price point. When less efficient mining operations shut down, the network automatically becomes easier, increasing profits for those who remain. Importantly, the network continues to function reliably despite external economic issues. Data suggests an upcoming adjustment that will make mining more profitable for those still operating, providing some short-term relief.

Currently, strong selling is holding the price of Bitcoin around $70,000, and any gains are being limited. We might see some relief later, but that’s not happening yet.

As long as energy prices remain high, the excess supply of minerals caused by miners will likely continue. The idea of digital gold is being challenged by real-world, physical issues.

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2026-03-23 17:17