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Crypto markets recover despite global energy concerns

By Robert Davis

22:24, 6 January 2022

Basic miner rig for cryptocurrency mining
Crypto markets recover after selloffs earlier in the day - Photo: Shutterstock

The cryptocurrency markets recovered slightly by 21:00 UTC on Thursday after falling sharply to begin the day despite ongoing global energy concerns.

Bitcoin was trading above $43,000 per unit, representing a price drop of 1.8% over the last 24 hours.

Popular assets like ethereum, cardano, and polkadot all regained their strength. Ethereum was trading at $3,432, a drop of 3.8% on the day, while cardano and polkadot both posted greater than 2% gains.

Earlier in the day, ethereum, polkadot, and solana had all lost more than 10% of their value while stablecoins proved to be the lone winners.

Bitcoin was trading at $42,991 per unit while ethereum slumped to $3,426 on the day.

The selloff erased more than $2bn (£1.48bn) from the total crypto market capitalisation, causing it to reach a three-month low of $2trn, according to data from CoinMarketCap.

Energy concerns

One of the biggest ongoing concerns for crypto prices is the energy crisis currently unfolding in Kazakhstan, which is the second-largest country in the world when it comes to BTC hashrate.

On Wednesday, Kazakhstan’s government resigned as widespread protests and riots developed in several cities. The protests occurred in response to the government removing its caps on inbound petroleum, which caused gas prices to double overnight.

Following the resignation, the country shut down its internet, essentially cutting off many miners from the market.

The Data Center Industry & Blockchain Association of Kazakhstan had previously estimated that the country could generate as much as $1.5bn (£1.11bn) from crypto mining, primarily from “gray miners,” or individuals who have their own crypto mining setups and are not part of a larger organisation.

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BTC/USD

67,351.45 Price
+0.510% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 21:00 (UTC)
Spread 106.00

XRP/USD

0.60 Price
+3.070% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 0.01168

DOGE/USD

0.13 Price
+6.990% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 0.0012872

ETH/USD

3,527.87 Price
+0.560% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 21:00 (UTC)
Spread 6.00

Miners come into focus

The energy crisis in Kazakhstan has brought publicly traded crypto mining companies back into focus for many investors, even though the miners have had a rough couple of months.

Companies like HIVE Blockchain, Riot Blockchain, and Hut8 are all trading well below their recent highs.

HIVE ended Thursday’s trading session down 1.6% to $2.13 per share while Riot and Hut8 each closed 4.48% and 3.52% off of their opening prices, respectively.

Riot currently trades at $20.48 per share which is down more than 42% over the last six months.

Hut8 is trading at $6.58, or more than 31% below its price from four weeks ago.

Miners are oversold

Until the energy crisis in Kazakhstan is resolved, some analysts say crypto mining stocks are the best play for investors.

Christopher Brendler, an analyst at investment bank D.A. Davidson, said the mining selloff from recent trading sessions has nothing to do with fundamentals, and insists that their gross margins will drive future price gains.

“While market excesses are clearly taking a beating with the anticipated rise in interest rates, we firmly believe current valuations have nothing to do with fundamentals and more due to the lack of institutional buy-in to this relatively obscure new sector,” Brendler wrote in a note that was quoted by CoinDesk, and confirmed by Capital.com.

Read more: Can a Bitcoin Mining Council make crypto biodegradable?

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3527.87 USD
19.54 +0.560%

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