Bitcoin Miners Thrive Amid Conflict Thanks to Diversified Energy Mix

Bitcoin miners, despite being in the midst of a conflict that drove up natural gas prices and affected liquefied natural gas (LNG) markets, have not seen significant increases in electricity costs. According to recent data from the University of Cambridge, only 8-10% of global hashrate sits in crude-linked electricity markets.

This is partly due to the shift towards renewable energy sources and partly because the digital mining industry has been trying to minimize its costs. With Bitcoin's halving making it more expensive to mine, miners have been migrating towards cheap gas and stranded renewables.

Companies like Applied Digital (APLD), Core Scientific (CORZ), IREN, and Hut 8 have pivoted significant capacity towards high-performance computing and AI data center hosting, blurring the line between Bitcoin miner and infrastructure operator. The largest U.S. public miners reflect this energy diversification, with Marathon Holdings (MARA) pursuing a geographically diversified portfolio including flared gas projects.

The conflict in Iran never meaningfully raised their electricity costs due to their diversified energy mix, heavy on renewables and domestic natural gas. However, the war hurt them anyway through its impact on inflation above 4%, which kept the Federal Reserve from cutting rates and tightened money, leading to less capital flowing into crypto.

A peace deal would reverse this chain of events, easing inflation, opening the door to rate cuts, and loosening the money supply. This would tend to find its way into Bitcoin, benefiting miners like Marathon Holdings, Riot Platforms (RIOT), CleanSpark (CLSK), TeraWulf (WULF), and Cipher Mining (CIFR) who are currently mining at a loss relative to spot price.