{"id":503649,"date":"2022-10-25T16:01:00","date_gmt":"2022-10-25T13:01:00","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/what-does-the-global-energy-crisis-mean-for-crypto-markets\/"},"modified":"2022-10-25T16:01:00","modified_gmt":"2022-10-25T13:01:00","slug":"what-does-the-global-energy-crisis-mean-for-crypto-markets","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/what-does-the-global-energy-crisis-mean-for-crypto-markets\/","title":{"rendered":"# What does the global energy crisis mean for crypto markets?"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_85 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a34c96fb77a6\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a34c96fb77a6\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-1'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/what-does-the-global-energy-crisis-mean-for-crypto-markets\/#%E2%80%9D_What_does_the_global_energy_crisis_mean_for_crypto_markets_%E2%80%9C\" >&#8221; What does the global energy crisis mean for crypto markets? &#8220;<\/a><ul class='ez-toc-list-level-2' ><li class='ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/buradabiliyorum.com\/en\/what-does-the-global-energy-crisis-mean-for-crypto-markets\/#The_experts_weigh_in_on_the_matter\" >The experts weigh in on the matter<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/buradabiliyorum.com\/en\/what-does-the-global-energy-crisis-mean-for-crypto-markets\/#Worsening_macroeconomic_climate_will_hurt_crypto_in_near_term\" >Worsening macroeconomic climate will hurt crypto in near term<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/buradabiliyorum.com\/en\/what-does-the-global-energy-crisis-mean-for-crypto-markets\/#Bitcoins_price_and_its_relationship_with_the_energy_market\" >Bitcoin\u2019s price and its relationship with the energy market\u00a0<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/buradabiliyorum.com\/en\/what-does-the-global-energy-crisis-mean-for-crypto-markets\/#Hope_still_remains_for_a_trend_reversal\" >Hope still remains for a trend reversal<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h1><span class=\"ez-toc-section\" id=\"%E2%80%9D_What_does_the_global_energy_crisis_mean_for_crypto_markets_%E2%80%9C\"><\/span>&#8221; What does the global energy crisis mean for crypto markets? &#8220;<span class=\"ez-toc-section-end\"><\/span><\/h1>\n<p><img decoding=\"async\" src=\"https:\/\/images.cointelegraph.com\/images\/840_aHR0cHM6Ly9zMy5jb2ludGVsZWdyYXBoLmNvbS91cGxvYWRzLzIwMjItMTAvY2Q3NTExOGQtNzUxYi00Njg3LTg4NTgtYzc2ZjJlY2YwYjBlLmpwZw==.jpg\" \/><\/p>\n<div class=\"post-content\" data-v-4b69a2fe>There\u2019s no denying that the world is currently facing an unprecedented energy crisis, one that has compounded severely in the aftermath of the COVID-19 pandemic so much so that countries across the globe \u2014 especially across Europe and North America \u2014 are witnessing severe shortages and steep spikes in the price of oil, gas and electricity.<\/p>\n<p>Limited gas supplies, in particular, stemming from the ongoing Russia-Ukraine conflict, have caused the price of essential commodities like fertilizer to shoot up dramatically. Not only that, but it has also resulted in the heightened use of coal and other natural resources. Coal consumption within Europe alone surged by 14% last year and is expected to <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.woodmac.com\/press-releases\/14-increase-in-european-coal-demand-to-be-short-term-trend\/\">rise by another 17%<\/a> by the end of 2022.<\/p>\n<p>To expound on the matter further, it is worth noting that European gas prices are now about 10 times higher than their average level over the past decade, <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.bbc.com\/news\/explainers-62644537\">reaching<\/a> a record high of <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/download-scripts-themes-apps\/\" data-internallinksmanager029f6b8e52c=\"9\" title=\"Download Scripts &amp; Themes &amp; Apps\" target=\"_blank\" rel=\"noopener\">app<\/a>roximately $335 per megawatt-hour during late August. <\/p>\n<p>Similarly, the United States Energy Information Administration\u2019s recently published winter fuel outlook for 2022 suggests that the average cost of fuel for Americans will <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.eia.gov\/outlooks\/steo\/special\/winter\/2022_winter_fuels.pdf\">increase<\/a> by a whopping 28% as compared to last year, rising up to a staggering $931.<\/p>\n<p>With such eye-opening data out in the open, it is worth delving into the question of how this ongoing energy shortage can potentially affect the crypto sector and whether its adverse effects will recede anytime soon.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"The_experts_weigh_in_on_the_matter\"><\/span>The experts weigh in on the matter<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Matthijs de Vries, founder and chief technical officer for AllianceBlock \u2014 a blockchain firm bridging the gap between decentralized finance (DeFi) and traditional finance \u2014 told Cointelegraph that the global economy is in bad shape thanks to a multitude of factors including the power crisis, looming recession, surging inflation and rising geopolitical tensions. He added:<\/p>\n<blockquote><p>\u201cThese issues are interlinked, primarily in the way that capital flows in and out of impactful industries. The worse the macroeconomic climate, the lower the capital (liquidity) that flows in and out of the digital asset industry. This liquidity is what enables the incentivization mechanisms of blockchain to continue working. So, for miners, if there is a shortage of liquidity, this means fewer transactions for them to confirm, lesser fees and decreased incentives.\u201d<\/p><\/blockquote>\n<p>Moreover, de Vries believes that rising energy costs could provide additional incentives for miners to move toward the validator ecosystem of Ethereum 2.0 that relies on a far more energy-efficient proof-of-stake (PoS) mechanism.<\/p>\n<p><strong><em>Recent:\u00a0The Madeira Bitcoin adoption experiment takes flight<\/em><\/strong><\/p>\n<p>A somewhat similar sentiment is echoed by Yuriy Snigur, CEO of Extrachain \u2014 an infrastructure provider for distributed applications, blockchains and decentralized autonomous organization (DAO) platforms \u2014 who believes that the ongoing energy price surge will impact proof-of-work (PoW) blockchains the most.<\/p>\n<p>\u201cThey are the most dependent on the energy sector. In my opinion, the value of a blockchain should not come from the meaningless burning of energy, which is why PoW is doomed eventually,\u201d he noted. <\/p>\n<h2><span class=\"ez-toc-section\" id=\"Worsening_macroeconomic_climate_will_hurt_crypto_in_near_term\"><\/span>Worsening macroeconomic climate will hurt crypto in near term<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Nero Jay, founder of the crypto <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/social-mediaa\/\" data-internallinksmanager029f6b8e52c=\"1\" title=\"Social Media\" target=\"_blank\" rel=\"noopener\">YouTube<\/a> channel Dapp Centre, told Cointelegraph that the challenges being witnessed will continue to have an overall negative impact on the crypto market, as a result of which most investors will continue to look at this yet nascent sector as being speculative and risky, at least for the foreseeable future.<\/p>\n<p>However, as a silver lining, he noted that the aforementioned challenges could serve as an opportunity for increased crypto adoption, especially as many countries like Venezuela, Turkey, Argentina, Zimbabwe and Sudan continue to be ravaged by hyperinflation and sanctions, which may give crypto assets more utility and use cases.<\/p>\n<p>Lastly, Jay believes that the worsening energy situation could result in increased scrutiny of the mining sector, especially since proponents of the zero carbon emission campaign will now have more fuel to criticize the space.<\/p>\n<p>\u201cMany are questioning the impact that crypto mining may have on the environment. The great <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">news<\/a> is we are already seeing many cryptocurrency projects, including Ethereum, that are making their blockchain platforms very efficient and low carbon emission based,\u201d he said.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Bitcoins_price_and_its_relationship_with_the_energy_market\"><\/span>Bitcoin\u2019s price and its relationship with the energy market\u00a0<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>From the outside looking in, increased energy prices will raise costs for miners, which in turn could force them to sell their held Bitcoin (BTC), thereby pushing down prices. Furthermore, heightened production can result in miners demanding higher prices to cover their daily operational costs and, in some cases, even forcing them to shut down their operations entirely or sell their equipment.<\/p>\n<p>Also, even if miners continue to go out of business, the total volume of BTC being mined will remain the same. However, the block rewards will be distributed among fewer individuals. This suggests that miners who can stave off the bearish pressure induced by rising energy costs stand to make massive profits. Andrew Weiner, vice president for cryptocurrency exchange MEXC, told Cointelegraph:<\/p>\n<blockquote><p>\u201cElectricity shortages can lead to higher electricity prices, raising the cost of Bitcoin mining substantially. In the event of a regional long-term power shortage, it will cause the migration of miners to other jurisdictions where relatively cheap electricity prices offer safety and stability.\u201d<\/p><\/blockquote>\n<h2><span class=\"ez-toc-section\" id=\"Hope_still_remains_for_a_trend_reversal\"><\/span>Hope still remains for a trend reversal<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Weiner said that, while the energy crisis could put pressure on Bitcoin\u2019s price, the poor lackluster state of the global economy could potentially counter this.<\/p>\n<p>In Weiner\u2019s view, the U.S. Federal Reserve\u2019s monetary policy in the current global economic environment has had the most significant influence on the cryptocurrency market, adding:<\/p>\n<blockquote><p>\u201cBeginning with the implementation of loose monetary policy by the Federal Reserve in 2020, institutions have digitally transformed their back-offices and accelerated their purchases of Bitcoin. When fiat depreciates, institutions adjust their strategy to allocate bitcoin as value-preserving assets.\u201d<\/p><\/blockquote>\n<p>He further noted that the cryptocurrency market, especially Bitcoin, is becoming increasingly correlated with Nasdaq and the S&amp;P 500, while its correlation with energy, oil and electricity will not be significant unless BTC mining becomes affected by a future global electricity shortage.<\/p>\n<p>Moreover, the ongoing energy crisis can potentially trigger more government spending programs resulting the them \u201cprinting\u201d more money to get themselves out of trouble. This can potentially result in a loss of confidence in fiat assets and more demand for digital currencies. This trend is not beyond the realm of possibilities since it is already being witnessed across several third-world nations and could even permeate into certain larger economies as well.<\/p>\n<p><strong><em>Recent:\u00a0Ethereum at the center of centralization debate as SEC lays claim<\/em><\/strong><\/p>\n<p>Just a couple of months ago, inflation in the eurozone <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.euronews.com\/my-europe\/2022\/07\/29\/inflation-across-the-eurozone-reaches-new-all-time-high-of-89\">scaled up<\/a> to an all-time high of 8.9%, a situation that was also witnessed in the United States, where inflation surged to a forty-year high of 8.5% back in August. And, while many individuals continue to be divided on the positive\/negative impact of the stimulus packages on the global economy, the fear of increased inflation alone stands to raise the demand for cryptocurrencies.<\/p>\n<p>Therefore, as we head into a future plagued by potential energy shortages and price surges, it will be interesting to see how the future of the digital asset market continues to play out, especially as rising geopolitical tensions and worsening market conditions continue to make matters worse.<\/p>\n<p><template data-name=\"subscription_form\" data-type=\"markets_outlook\"><\/template><\/div>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMLG0nwswvr63Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/strong>\n<\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more News articles, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/general\/\" target=\"_blank\" rel=\"noopener\">General category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"https:\/\/cointelegraph.com\/news\/what-does-the-global-energy-crisis-mean-for-crypto-markets\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8221; What does the global energy crisis mean for crypto markets? &#8220; There\u2019s no denying that the world is currently facing an unprecedented energy crisis, one that has compounded severely in the aftermath of the COVID-19 pandemic so much so that countries across the globe \u2014 especially across Europe and North America \u2014 are witnessing&#8230;<\/p>\n","protected":false},"author":1,"featured_media":503650,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/images.cointelegraph.com\/images\/1200_aHR0cHM6Ly9zMy5jb2ludGVsZWdyYXBoLmNvbS91cGxvYWRzLzIwMjItMTAvY2Q3NTExOGQtNzUxYi00Njg3LTg4NTgtYzc2ZjJlY2YwYjBlLmpwZw==.jpg","fifu_image_alt":"","footnotes":""},"categories":[1],"tags":[74862,74937,74858,82402,117,4965],"class_list":["post-503649","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-bitcoin","tag-bitcoin-price","tag-bitcoin-regulation","tag-ether-price","tag-business","tag-technology"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/503649","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=503649"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/503649\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/503650"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=503649"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=503649"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=503649"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}