EIA’s Short-Term Energy Outlook highlights the uncertainty in the markets with their wider range in expectations of natural gas price from $1.5 to $12/mmbtu.
Key Takeaway #2
Hedging strategies are advisable in an uncertain market to protect the business.
Key Takeaway #3
Load should be lower than last year, assuming normal weather.
Key Takeaway #4
Price is unlikely going to be lower for those not directly tied to the wholesale market, as we experience a regulatory recovery lag to recover the high fuel prices of last year.
EIA released its short-term energy outlook, and it was informative in terms of variables but not necessarily prescient. The natural gas 95% confidence range is very wide ($1.5-$12/mmbtu), indicating the risk of the market as shown in the figure below. This does support a hedging policy to mitigate the extremes.
Figure: Henry Hub natural gas price and NYMEX confidence intervals Source: EIA
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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
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 on or through http://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.
Ooda Commodities, LLC is a member of NFA and is 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 2022 BitOoda Holdings, Inc. All rights reserved. No part of this material may be reprinted, redistributed, or sold without prior written consent of BitOoda.
EIA released its short-term energy outlook, and it was informative in terms of variables but not necessarily prescient. The natural gas 95% confidence range is very wide ($1.5-$12/mmbtu), indicating the risk of the market as shown in the figure below. This does support a hedging policy to mitigate the extremes.
Figure: Henry Hub natural gas price and NYMEX confidence intervals Source: EIA
The report shows why natural gas is very much tied to power price, as natural gas is the largest share of generation in the US as noted in the figure below.
Figure: US electricity generation by source, all sectors Source: EIA
EIA notes that electricity demand will likely go down relative to last year – much of this is driven by weather, as the forecast is based on normal weather. Last year was a very hot summer overall for the US.
Figures: US electricity consumption, components of annual change Source: EIA
Figure: US summer cooling degree days Source: EIA
The interesting result EIA shows with this outlook is that industrial rates will come down slightly while residential and commercial continue to rise. This is likely a function of regulatory lag in the recovery of rates in the commercial and residential sector, whereas industry is more tied to the wholesale prices.
Figure: Power Price Past & Outlook 2019 - 2024 Source: EIA
An important trend to monitor is the growth of solar, as it may influence your own energy choices if your facilities are good locations for solar development. The increase in solar is not based on money-losing decisions, rather the value of tax credits to higher utility rates are driving this growth. BitOoda has the experience to help you evaluate this as an option.
Figures: US renewable energy supply, Components of annual change Source: EIA
Miner WoW View
Mining economics stabilized over the past week.
The S19JPro breakeven price is between $80-$90/MWh.
Figure: Weekly Average Cash Contribution After Power Expense Note: Assumes a PUE of 1.12 Source: BitOoda, Bloomberg, Coinmetrics
Henry Hub WoW
This was the first week-on-week that is essentially flat for the past month.
The Freeport LNG facility seems to be on track to start by end of March.
Source: BitOoda, CME Group
PJM WoW
For the PJM region, we use PJM-W hub as the benchmark. PJM-W is the most traded power hub in the US.
Power is coming off more than the prompt year.
Source: BitOoda, CME Group
ERCOT WoW
For the ERCOT region, we use ERCOT-North hub as the benchmark. ERCOT-North is the most traded power hub for ERCOT.
We are seeing similar changes to those in PJM – prompt months drop.
Source: BitOoda, CME Group
CAISO WoW
For the CAISO region, we use SP-15 hub as the benchmark. SP-15 is located in Southern California.
Power markets are up in the prompt – there are a lot of issues in CA.
Source: BitOoda, CME Group
NYISO WoW: NY-G
This slide uses the NY-G hub as the benchmark for the NYISO region. NY-G is the most traded power hub in NYISO.
Power dropped a bit, but HR is still high.
Source: BitOoda, CME Group
NYISO WoW: NY-A
This slide adds NY-A for the NYISO region.
NY-A continues to move contrary to other markets. Power and HR are up.
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
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 on or through http://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.
Ooda Commodities, LLC is a member of NFA and is 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 2022 BitOoda Holdings, Inc. All rights reserved. No part of this material may be reprinted, redistributed, or sold without prior written consent of BitOoda.
EIA released its short-term energy outlook, and it was informative in terms of variables but not necessarily prescient. The natural gas 95% confidence range is very wide ($1.5-$12/mmbtu), indicating the risk of the market as shown in the figure below. This does support a hedging policy to mitigate the extremes.
Figure: Henry Hub natural gas price and NYMEX confidence intervals Source: EIA
The report shows why natural gas is very much tied to power price, as natural gas is the largest share of generation in the US as noted in the figure below.
Figure: US electricity generation by source, all sectors Source: EIA
EIA notes that electricity demand will likely go down relative to last year – much of this is driven by weather, as the forecast is based on normal weather. Last year was a very hot summer overall for the US.
Figures: US electricity consumption, components of annual change Source: EIA
Figure: US summer cooling degree days Source: EIA
The interesting result EIA shows with this outlook is that industrial rates will come down slightly while residential and commercial continue to rise. This is likely a function of regulatory lag in the recovery of rates in the commercial and residential sector, whereas industry is more tied to the wholesale prices.
Figure: Power Price Past & Outlook 2019 - 2024 Source: EIA
An important trend to monitor is the growth of solar, as it may influence your own energy choices if your facilities are good locations for solar development. The increase in solar is not based on money-losing decisions, rather the value of tax credits to higher utility rates are driving this growth. BitOoda has the experience to help you evaluate this as an option.
Figures: US renewable energy supply, Components of annual change Source: EIA
Miner WoW View
Mining economics stabilized over the past week.
The S19JPro breakeven price is between $80-$90/MWh.
Figure: Weekly Average Cash Contribution After Power Expense Note: Assumes a PUE of 1.12 Source: BitOoda, Bloomberg, Coinmetrics
Henry Hub WoW
This was the first week-on-week that is essentially flat for the past month.
The Freeport LNG facility seems to be on track to start by end of March.
Source: BitOoda, CME Group
PJM WoW
For the PJM region, we use PJM-W hub as the benchmark. PJM-W is the most traded power hub in the US.
Power is coming off more than the prompt year.
Source: BitOoda, CME Group
ERCOT WoW
For the ERCOT region, we use ERCOT-North hub as the benchmark. ERCOT-North is the most traded power hub for ERCOT.
We are seeing similar changes to those in PJM – prompt months drop.
Source: BitOoda, CME Group
CAISO WoW
For the CAISO region, we use SP-15 hub as the benchmark. SP-15 is located in Southern California.
Power markets are up in the prompt – there are a lot of issues in CA.
Source: BitOoda, CME Group
NYISO WoW: NY-G
This slide uses the NY-G hub as the benchmark for the NYISO region. NY-G is the most traded power hub in NYISO.
Power dropped a bit, but HR is still high.
Source: BitOoda, CME Group
NYISO WoW: NY-A
This slide adds NY-A for the NYISO region.
NY-A continues to move contrary to other markets. Power and HR are up.
