Soaring energy prices are not sparing the energy-intensive cryptocurrency sector. Two sites owned by the American company Compass Mining, located in the State of Georgia, in the United States, will close their doors, swept away by the explosion in electricity prices across the Atlantic, reports the specialized media CoinDesk, September 5. The sites were mining farms where customers could take part directly in the cryptocurrency mining activity.
It must be said that electricity prices have increased by more than 50% in Georgia. And to this is added the fall in the price of cryptocurrencies since the spring, which has dealt a blow to the profitability of the sector. Worse still for Compass Mining, the group had invested heavily in Russia, where major mining projects had been developed. Investments that fell through with the implementation of Western sanctions against Russia, following the war in Ukraine.
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Soon green mining farms?
The accumulation of difficulties had pushed the boss of the group towards the exit, as well as the reduction of 15% of the workforce of the company. This site closure in Georgia is therefore a new episode that is very complicated to manage, which highlights the impossibility of separating the cost of energy and the profitability of mining activity. Compass Mining has planned to transfer its Georgian machines to Texas, but the latter too is experiencing problems with the electricity supply. The situation is such that the site has had to resort to generators to continue its activity.
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Compass Mining’s troubles highlight one of the cryptocurrency industry’s two Achilles’ heels with high cryptocurrency price volatility: the industry’s dependence on energy prices. The future of the sector therefore depends on the emergence of green mining farms, powered by renewable energies. In addition to a much better carbon footprint, they have the advantage of being independent of the electricity grid.
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