Latest: Us Access To Venezuelan Oil Could Eventually Lower Bitcoin Mining...

Bitcoin mining electricity costs could fall if Venezuelan oil production increases, though it may take several years before the benefits are fully realized, Bitfinex analysts say.

US companies moving into Venezuela to extract the country’s enormous crude oil reserves could lower electricity prices for Bitcoin miners and improve their profitability margins, analysts at crypto exchange Bitfinex said.

“Cheaper and more abundant energy would improve miner margins globally and could unlock a new phase of mining expansion, particularly in regions able to secure long-term power contracts,” the Bitfinex analysts said in a note on Monday.

The US started seizing Venezuelan oil tankers in December, and it is expected to start extracting Venezuela’s 303 billion barrels worth of crude oil reserves after capturing Venezuelan President Nicolás Maduro on Saturday.

Chevron is the only major US oil company currently operating in Venezuela, but US President Donald Trump is pushing for other major players to enter the country to start producing.

The intervention will have “immediate spillover effects” in the energy markets and second-order implications for Bitcoin (BTC) and the broader cryptocurrency market, the Bitfinex analysts said, while adding that only a fraction of Venezuela's oil reserves would need to be tapped to meaningfully impact energy prices.

It could provide much-needed relief for Bitcoin miners, whose profitability has been squeezed by a 25% drop in Bitcoin from its all-time high, rising mining difficulty, and increasing electricity costs.

However, “Any meaningful increase in Venezuelan output would take years, not months,” the Bitfinex analysts said, adding that the pace will hinge on how the US handles Venezuela’s political transition and sanctions that linger over the South American country.

It may even take a decade for the US to make the most of Venezuela’s oil reserves, Matt Mena, crypto research strategist at crypto asset manager 21Shares, said in a note:

In the 1970s, Venezuela produced around 3.5 million barrels per day — representing roughly 7% of global crude output — but that figure has since fallen to around 1 million barrels per day and now only accounts for about 1% of global production.

Source: CoinTelegraph