Experts assessed the impact of oil prices amid the Iran conflict on Bitcoin mining. Oil prices affect Bitcoin mining economics differently depending on the region.
Miners may feel the consequences of an oil crisis linked to the Middle East conflict primarily due to Bitcoin price volatility, rather than electricity bills. This is the conclusion reached by analysts at the Hashprice Index platform, backed by the mining company Luxor Technology.
According to their estimates, the risk to Bitcoin mining associated with high oil prices is low: approximately 8–10% of the global hashrate is accounted for by grids where electricity prices are tied to the cost of crude oil. The remaining 90% relies on hydro, coal, gas, and nuclear power plants.
In the US, Russia, China, Canada, and Kazakhstan, electricity prices depend on natural gas, coal, or hydroelectric power plants, rather than crude oil. Almost all electricity in Paraguay and Ethiopia is generated by hydroelectric power plants. In Norway, Iceland, and Bhutan — by hydroelectric and geothermal power plants. None of these power grids rely on crude oil, the report's authors note.
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The truly "oil-based" countries are the Persian Gulf states: the UAE and Oman collectively account for approximately 65 EH/s, or about 6% of the Bitcoin network's hashrate. Miners in these countries operate primarily on natural gas obtained during oil extraction, and electricity prices are directly tied to the cost of oil.
According to expert estimates, another 9 EH/s (0.8%) is located in Iran. Together with miners from Kuwait, Qatar, and Libya, the total oil-dependent hashrate amounts to approximately 8–10% of the global total.
How a $100 Oil Shock Impacts Bitcoin Mining Profitability
Based on these figures, analysts believe that a prolonged oil shock with prices above $100 per barrel is unlikely to have a significant direct impact on mining economics in the near term. However, it could affect the price of the cryptocurrency, which would reduce mining profitability.
Even an oil price above $100 per barrel would not lead to a significant portion of the hashrate being disconnected due to rising costs. The real threat lies in revenues, the report states.
A geopolitical shock severe enough to push the price of oil above $100 per barrel could also negatively impact the price of Bitcoin, analysts believe. And this is precisely the variable that determines mining profitability for most industry participants.
Following the US and Israeli attack on Iran on February 28, the Bitcoin exchange rate dropped to $63,000, but over the past two weeks, it has grown by $10,000 (+16%). As of 17:00 Moscow time on Friday, March 13, the price of the first cryptocurrency is fluctuating around $73,500.
