CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 82.67% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money

Crypto mining stocks falling over energy use concerns

By Robert Davis

18:37, 6 December 2021

Cryptocurrency mining equipment in a server room
Crypo miners stock prices have been falling over energy use concerns, but operations seem to be unaffected - Credit: Shutterstock

Cryptocurrency mining stocks are feeling the pressure from regulators to lower their growing energy consumption as operations continue to increase.

Stock in companies such as Hut 8 (HUT), Marathon Digital Holdings (MARA), and Riot Blockchain (RIOT) have all been trending down since 2 December, with some losing 10% or more in a single trading session.

HUT opened at $8.01 per share on Monday, which was more than 15% below its Friday close price of $9.37. The stock recovered to $9.17 by 18:00 UTC, a dip of just 2.1% on the day.

RIOT and MARA both opened considerably below their Friday close prices as well. RIOT recovered to $27.95 per share while MARA was up slightly to $41.96.

Over the last week, RIOT and HUT have lost 26% and 28% in value, respectively. MARA has lost just under 20% over the same time frame.  

Environmental concerns

The stock moves correspond with growing calls from lawmakers worldwide for crypto mining companies to lower their energy consumption and address their impact on the environment.

Regulators in both China and India have previously voiced their concerns, but the stocks began falling sharply after US Sen. Elizabeth Warren (D-MA) got involved last week.

On 2 December, Sen. Warren sent a letter to Jeffrey Kirt, CEO of New York-based mining company Greenidge Generation Holdings, that raised concerns over the company’s claim that its operations are “entirely carbon neutral.”

DOGE/USD

0.46 Price
-0.360% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 22:00 (UTC)
Spread 0.0022912

BTC/USD

99,911.35 Price
-0.290% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 22:00 (UTC)
Spread 50.00

ETH/USD

3,972.14 Price
-1.040% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 22:00 (UTC)
Spread 1.75

XRP/USD

2.51 Price
-1.760% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 22:00 (UTC)
Spread 0.01253

The letter requests “information on Greenidge’s operations and the resulting impacts on the environment and local communities” as the company seeks to expand its operations in New York and into South Carolina.

Hash rate on the rise

Miners seem unphased by the recent move as the total hash rate continues to climb, according to data from Blockchain.com.

Hashrate is a measure of the computational power per second used when mining. More simply, it is the speed of mining. It is measured in units of hash/second, meaning how many calculations per second can be performed, according to bitflyer.com. 

As of 4 December, miners were producing more than 168.3m terahashes per second (TH/s), which measures the number of attempts to create blocks on the blockchain. This is nearly twice as much as miners produced in July, the data shows.

For many miners, an increase in their terahash rate corresponds with an increase in operational efficiency and profitability.

For example, HUT increased its hash rate to 1.7 TH/s in November, which resulted in it mining between 1.8 and two additional Bitcoins per day, according to its latest monthly data release.

Jason Zaluski, head of technology for Hut 8 said that this change is bringing in more than $140,000 in revenue per day and increased the company’s unit margins up to 95%.

Read more: Canadian Bitcoin miners HUT, BITF unveil November data

Related topics

Rate this article

The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
Capital Com is an execution-only service provider. The material provided in this article is for information purposes only and should not be understood as investment advice. Any opinion that may be provided on this page does not constitute a recommendation by Capital Com or its agents and has not been prepared in accordance with the legal requirements designed to promote investment research independence. While the information in this communication, or on which this communication is based, has been obtained from sources that Capital.com believes to be reliable and accurate, it has not undergone independent verification. No representation or warranty, whether expressed or implied, is made as to the accuracy or completeness of any information obtained from third parties. If you rely on the information on this page, then you do so entirely at your own risk.

Still looking for a broker you can trust?

Join the 660,000+ traders worldwide that chose to trade with Capital.com

1. Create & verify your account 2. Make your first deposit 3. You’re all set. Start trading