Power Markets

Time to hedge?

Power Markets for Bitcoin Miners, 11/20/23

David Bellman

Key Takeaway #1

The winter 2023/24 forward gas and power curves are at their lowest levels from the past two months.

Key Takeaway #2

This creates an incentive for miners to hedge some of the power cost to mitigate against major weather changes.

Key Takeaway #3

Mining economics are flat, as hash and BTC prices have been moving together.

Key Takeaway #4

Gas prices only saw minor moves, but PJM and ERCOT power finally moved downward to catch up to the recent gas moves.

The evolution of the winter 2023/24 forward curve has certainly turned bearish, as significant cold has failed to turn up and production continues to grow beyond most expectations. The curve less than a month ago showed prices closer to the $4/mmbtu range – but as of late it is now the lowest curve over the past month. The curve has dropped nearly 20% since the early October peak.

Power curves have also followed a similar trend, dropping closer to 15% from October peak. The curve at these low levels certainly would entice those looking to lock in power prices. There is certainly room to drop to the low 2’s in gas, but the upside is quite asymmetrical. Given the issues in the grid we highlighted in our last report, there is a potential for power to disconnect from gas and produce higher prices (with corresponding low gas prices). This is also likely why the power curve is not as low as gas prices.

Winter typically has been just about the weather in N. America. However, with the significant volumes of LNG now being exported from the US, we need to look globally. So far, the Northern Hemisphere seems warmer than usual. Market sentiment points to doing some level of hedging if you are tied to wholesale market swings. Please reach out to us to help develop and execute your power and hedging strategies.

‍

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The evolution of the winter 2023/24 forward curve has certainly turned bearish, as significant cold has failed to turn up and production continues to grow beyond most expectations. The curve less than a month ago showed prices closer to the $4/mmbtu range – but as of late it is now the lowest curve over the past month. The curve has dropped nearly 20% since the early October peak.

Power curves have also followed a similar trend, dropping closer to 15% from October peak. The curve at these low levels certainly would entice those looking to lock in power prices. There is certainly room to drop to the low 2’s in gas, but the upside is quite asymmetrical. Given the issues in the grid we highlighted in our last report, there is a potential for power to disconnect from gas and produce higher prices (with corresponding low gas prices). This is also likely why the power curve is not as low as gas prices.

Winter typically has been just about the weather in N. America. However, with the significant volumes of LNG now being exported from the US, we need to look globally. So far, the Northern Hemisphere seems warmer than usual. Market sentiment points to doing some level of hedging if you are tied to wholesale market swings. Please reach out to us to help develop and execute your power and hedging strategies.

‍

Disclosures

Purpose This research is only for the clients of BitOoda. This research is not intended to constitute an offer, solicitation, or invitation for any securities and may not be distributed into jurisdictions where it is unlawful to do so. For additional disclosures and information, please contact a BitOoda representative at info@bitooda .io. Analyst Certification 10 David Bellman, the research analyst denoted by an “AC” on the cover of this report, hereby certifies that all of the views expressed in this report accurately reflect his personal views, which have not been influenced by considerations of the firm’s business or client relationships. Conflicts of Interest This research contains the views, opinions, and recommendations of BitOoda. This report is intended for research and educational purposes only. We are not compensated in any way based upon any specific view or recommendation. General Disclosures Any information (“Information”) provided by BitOoda Holdings, Inc., BitOoda Digital, LLC, BitOoda Technologies, LLC or Ooda Commodities, LLC and its affiliated or related companies (collectively, “BitOoda”), either in this publication or document, in any other communication, or through http on or ://www.bitooda.io/, including any information regarding proposed transactions or trading strategies, is for informational purposes only and is provided without charge. BitOoda is not and does not act as a fiduciary or adviser, or in any similar capacity, in providing the Information, and the Information may not be relied upon as investment, financial, legal, tax, regulatory, or any other type of advice. The Information is being distributed as part of BitOoda’s sales and marketing efforts as an introducing broker and is incidental to its business as such. BitOoda seeks to earn execution fees when its clients execute transactions using its brokerage services. BitOoda makes no representations or warranties (express or implied) regarding, nor shall it have any responsibility or liability for the accuracy, adequacy, timeliness or completeness of, the Information, and no representation is made or is to be implied that the Information will remain unchanged. BitOoda undertakes no duty to amend, correct, update, or otherwise supplement the Information. The Information has not been prepared or tailored to address, and may not be suitable or appropriate for the particular financial needs, circumstances or requirements of any person, and it should not be the basis for making any investment or transaction decision. The Information is not a recommendation to engage in any transaction. The digital asset industry is subject to a range of inherent risks, including but not limited to: price volatility, limited liquidity, limited and incomplete information regarding certain instruments, products, or digital assets, and a still emerging and evolving regulatory environment. The past performance of any instruments, products or digital assets addressed in the Information is not a guide to future performance, nor is it a reliable indicator of future results or performance. All derivatives brokerage is conducted by Ooda Commodities, LLC a member of NFA and subject to NFA’s regulatory oversight and examinations. However, you should be aware that NFA does not have regulatory oversight authority over underlying or spot virtual currency products or transactions or virtual currency exchanges, custodians or markets. BitOoda Technologies, LLC is a member of FINRA. “BitOoda”, “BitOoda Difficulty”, “BitOoda Hash”, “BitOoda Compute”, and the BitOoda logo are trademarks of BitOoda Holdings, Inc. Copyright 2023 BitOoda Holdings, Inc. All rights reserved. No part of this material may be reprinted, redistributed, or sold without prior written consent of BitOoda.

The evolution of the winter 2023/24 forward curve has certainly turned bearish, as significant cold has failed to turn up and production continues to grow beyond most expectations. The curve less than a month ago showed prices closer to the $4/mmbtu range – but as of late it is now the lowest curve over the past month. The curve has dropped nearly 20% since the early October peak.

Power curves have also followed a similar trend, dropping closer to 15% from October peak. The curve at these low levels certainly would entice those looking to lock in power prices. There is certainly room to drop to the low 2’s in gas, but the upside is quite asymmetrical. Given the issues in the grid we highlighted in our last report, there is a potential for power to disconnect from gas and produce higher prices (with corresponding low gas prices). This is also likely why the power curve is not as low as gas prices.

Winter typically has been just about the weather in N. America. However, with the significant volumes of LNG now being exported from the US, we need to look globally. So far, the Northern Hemisphere seems warmer than usual. Market sentiment points to doing some level of hedging if you are tied to wholesale market swings. Please reach out to us to help develop and execute your power and hedging strategies.

‍

Disclosures

Purpose This research is only for the clients of BitOoda. This research is not intended to constitute an offer, solicitation, or invitation for any securities and may not be distributed into jurisdictions where it is unlawful to do so. For additional disclosures and information, please contact a BitOoda representative at info@bitooda .io. Analyst Certification 10 David Bellman, the research analyst denoted by an “AC” on the cover of this report, hereby certifies that all of the views expressed in this report accurately reflect his personal views, which have not been influenced by considerations of the firm’s business or client relationships. Conflicts of Interest This research contains the views, opinions, and recommendations of BitOoda. This report is intended for research and educational purposes only. We are not compensated in any way based upon any specific view or recommendation. General Disclosures Any information (“Information”) provided by BitOoda Holdings, Inc., BitOoda Digital, LLC, BitOoda Technologies, LLC or Ooda Commodities, LLC and its affiliated or related companies (collectively, “BitOoda”), either in this publication or document, in any other communication, or through http on or ://www.bitooda.io/, including any information regarding proposed transactions or trading strategies, is for informational purposes only and is provided without charge. BitOoda is not and does not act as a fiduciary or adviser, or in any similar capacity, in providing the Information, and the Information may not be relied upon as investment, financial, legal, tax, regulatory, or any other type of advice. The Information is being distributed as part of BitOoda’s sales and marketing efforts as an introducing broker and is incidental to its business as such. BitOoda seeks to earn execution fees when its clients execute transactions using its brokerage services. BitOoda makes no representations or warranties (express or implied) regarding, nor shall it have any responsibility or liability for the accuracy, adequacy, timeliness or completeness of, the Information, and no representation is made or is to be implied that the Information will remain unchanged. BitOoda undertakes no duty to amend, correct, update, or otherwise supplement the Information. The Information has not been prepared or tailored to address, and may not be suitable or appropriate for the particular financial needs, circumstances or requirements of any person, and it should not be the basis for making any investment or transaction decision. The Information is not a recommendation to engage in any transaction. The digital asset industry is subject to a range of inherent risks, including but not limited to: price volatility, limited liquidity, limited and incomplete information regarding certain instruments, products, or digital assets, and a still emerging and evolving regulatory environment. The past performance of any instruments, products or digital assets addressed in the Information is not a guide to future performance, nor is it a reliable indicator of future results or performance. All derivatives brokerage is conducted by Ooda Commodities, LLC a member of NFA and subject to NFA’s regulatory oversight and examinations. However, you should be aware that NFA does not have regulatory oversight authority over underlying or spot virtual currency products or transactions or virtual currency exchanges, custodians or markets. BitOoda Technologies, LLC is a member of FINRA. “BitOoda”, “BitOoda Difficulty”, “BitOoda Hash”, “BitOoda Compute”, and the BitOoda logo are trademarks of BitOoda Holdings, Inc. Copyright 2023 BitOoda Holdings, Inc. All rights reserved. No part of this material may be reprinted, redistributed, or sold without prior written consent of BitOoda.

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Power Markets for Bitcoin Miners, 11/20/23

Key Takeaway #1

Key Takeaway #2

Key Takeaway #3

Key Takeaway #4

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