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The Costa Group Holdings Ltd (ASX: CGC) share price is continuing its steep descent after plunging 8% yesterday.

At the time of writing, the horticulture company’s shares are down 2.64% to $2.58 apiece.

What happened to Costa shares?

Following the company market update on Monday, investors drew ire, sending the Costa share price to a 52-week low.

The negative reaction spurred a large number of shares being traded – more than 16 million in total for the day.

Subsequently, this sparked a please explain letter from the stock exchange operator, ASX Ltd (ASX: ASX).

Costa didn’t respond until the next day (early this morning) to the request regarding its ASX price query.

Management stated that it “wasn’t aware of any information that its earnings for H1 FY22 are likely to come as a surprise to the market.”

It expects the unaudited results for both the international and domestic produce segments to be ahead when compared to the prior corresponding period (H1 FY21).

Furthermore, unaudited Group EBITDA before movement in biological assets and material items is forecasted to be up 10%-15% on H1 FY21.

Costa acknowledged a recent broker report regarding a revision of its earnings. It said that while the analyst’s view is subjective, “this would not materially impact on analyst consensus.”

Since then, the particular broker has provided a further update following the recent share price movement.

Costa share price summary

It has been a difficult past couple of months for the Costa share price, tumbling by 25% from its year-to-date high of $3.455.

The company’s shares have suffered from a number of broker downgrades amid the extreme volatility on the ASX.

When looking at year to date, its shares are down roughly 15%.

Based on today’s price, Costa commands a market capitalisation of $1.34 billion.

The post Costa Group shares down, responds to ASX query. What happened? appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Tuesday
• Why Costa, Domino’s, EML, and Novonix shares are dropping
• Why is the Costa share price sinking 12% to a two-year low?
• ASX 200 midday update: EML crashes amid CEO exit, Costa and Domino’s sink on broker downgrades
• Top broker names 3 of the best ASX 200 shares to buy in FY23

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended COSTA GRP FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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S&P/ASX 200 Index (ASX: XJO) energy retailers were centre stage last month when the Australian Energy Market Operator (AEMO) capped energy prices across much of Australia.

And now some of their peers could be pushing back against fees expected to be charged by the market operator.

Let’s take a closer look at the battle that might be about to heat up between energy retailers and the AEMO.

ASX 200 energy retailers suffered in June

Here’s how ASX 200 energy retailers performed amid the chaos last month:

• The AGL Energy Limited (ASX: AGL) share price slumped nearly 6% in June
• The Origin Energy Ltd (ASX: ORG) share price plunged 16% last month

Much of the latter’s tumble was due to the withdrawal of the company’s financial year 2023 guidance amid volatility in energy markets.

Meanwhile, AGL pushed back the expected restart of its Loy Yang A Unit 2 and announced its former suitor Brookfield Asset Management had sneakily snapped up 2.5% of its shares.

Energy retailers could fight against AEMO fees

Six energy retailers have considered waging a legal battle against AEMO fees following last month’s cap on wholesale power prices, the Australian Financial Review (AFR) recently reported.

The unnamed companies have reportedly looked to dispute a bill that will see them indirectly compensating electricity generators. According to the publication, they would likely claim generators are being offered too much compensation.

AEMO ordered generators to produce electricity last month. It did so in a bid to keep lights on amid the cap on energy prices. The operator now plans to pay generators for energy produced and compensation for additional losses.

Most of that compensation – reported to be worth millions – will be recovered from energy retailers.

But already struggling retailers – which are generally hedged against power prices – are exposed to such compensation costs, the AFR reported. The publication says the bills will likely land on energy retailers’ desks from November.

The post Own ASX 200 energy shares? Retailers could hit back on AEMO fees appeared first on The Motley Fool Australia.

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More reading

• Top brokers name 3 ASX shares to buy next week
• Why did the AGL share price have a volatile FY22?
• AGL share price lifts as Brookfield caught buying
• Origin share price shrugs off record $17 million fine from Federal Court
• Here are the top 10 ASX shares today

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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It has been yet another dark day for the Kogan.com Ltd (ASX: KGN) share price and the Temple & Webster Group Ltd (ASX: TPW) share price on Tuesday.

In afternoon trade, both ecommerce companies have seen their shares make double-digit declines and tumble to two-year lows.

The Kogan share price is currently down 10% to $2.68, whereas the Temple & Webster share price is down 15% to $3.01.

Why are these ecommerce shares sinking?

Today’s declines are a little bit of a mystery but there are a couple of potential catalysts.

One is that these declines coincide with the launch of Prime Day by ecommerce behemoth Amazon.

This mega sales event could be reminding investors just how much of a force Amazon is and how it could win significant market share from these smaller rivals. Particularly given its superior delivery capabilities and the expansion of its offering since launch to now cover everything from books, clothing, whitegoods, and even furniture.

Anything else?

In addition, the weakness in the Kogan and Temple & Webster share prices mirrors what happened with their ecommerce peers on Wall Street and the LSE overnight.

For example, the likes of ASOS, Boohoo, Mercado Libre, Peloton, Shopify, and Wayfair all recorded significant declines on Monday night. It appears as though investors are feeling bearish about the prospects of online retailing in the current environment.

Following today’s declines, the Kogan share price is now down almost 70% in 2022 and the Temple & Webster share price is down 72% year to date.

The post Why are these 2 ASX ecommerce shares are hitting two-year lows? appeared first on The Motley Fool Australia.

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More reading

• These are the 10 most shorted ASX shares
• Why I think the Temple & Webster share price is on sale right now
• Why did the Kogan share price go backwards in FY22?
• Why did the Kogan share price sink 22% in June?
• Best ASX shares to buy in July 2022

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Kogan.com ltd and Temple & Webster Group Ltd. The Motley Fool Australia has positions in and has recommended Kogan.com ltd. The Motley Fool Australia has recommended Temple & Webster Group Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Ethereum (CRYPTO: ETH) price is down 5.4% since this time yesterday.

The world’s number two crypto by market cap is currently trading for US$1,092 (AU$1,620).

With another round of selling, the Ethereum price is now down 71% in the 2022 calendar year, and down a painful 78% since achieving record highs of US$4,892 on 16 November last year.

Ether’s sliding fortune has not only disappointed crypto investors, it also looks to be crimping interest in participating in the token’s merge.

What is the merge?

The Ethereum merge, formerly called Ethereum 2.0, will transition the blockchain from an energy-intensive proof-of-work protocol to a far less energy-hungry proof-of-stake protocol.

The ongoing process allows people to stake 32 Ether to participate in verifying blockchain transactions, and thus earn a reward. Under the staking system, far fewer computers are involved, which also decreases overall costs and increases speeds.

But as the Ethereum price has been tumbling, it’s also seen weekly deposits of Ethereum 2.0 staking contracts fall to new lows.

Sliding Ethereum price hits staking interest

As the Bitcoinist reported, Ethereum 2.0 staking contracts have tumbled to their lowest value ever.

Glassnode data indicates that the weekly average of 32-Ether deposits in 2021 was around 500 to 1,000 per day. On 3 July this year, that metric tumbled to a mere 122, the lowest level since the launch of the Ether 2.0 staking contracts.

The big drop in interest appears to be due to the big retrace in the Ethereum price.

At the current prices, less than 17% of the total deposited supply of tokens in the Ethereum 2.0 contracts are in profit. Most of that will have been deposited in, or before, January 2021, the last time the Ethereum price was trading below these levels.

Now what?

With the Ethereum price, and indeed most every leading crypto, down sharply this year, eToro’s market analyst and crypto expert Simon Peters said:

The message for investors at the moment is to hold tight and keep watch of the market. We see regular institutional movement and ongoing growth of the sector as a key indicator that the game is not up. What’s important to remember, however, is that diversifying within the sector, as in any asset class, is essential to spread risk.

The post Could this one metric be why the Ethereum price is down 5% today? appeared first on The Motley Fool Australia.

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More reading

• Why FY22 was the best and worst of years for the Ethereum price
• The Ethereum price collapsed 47% in June. Here’s why
• How did the price of crypto assets perform in June?
• Ethereum price falls after hackers begin laundering $100 million bridge exploit
• What one tech guru thinks of the current crypto market

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Ethereum. The Motley Fool Australia has recommended Ethereum. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The 2022 financial year has just wrapped up, and what a year it was. FY2022 saw a massive increase in share market volatility – to levels investors not seen since the onset of the pandemic back in early 2020. Over the financial year just gone, the S&P/ASX 200 Index (ASX: XJO) ended up losing 10.19%.

So in a year where share markets went backwards, what are some of the lessons we, as ASX investors, can take away?

Here are three:

3 ASX investing lessons from FY2022

Don’t trust the RBA

Perhaps above all, FY2022 has reminded us of how important the Reserve Bank of Australia (RBA) and interest rates are when it comes to ASX shares. For most of last year, the RBA was telling us all that it only intended to start raising interest rates in 2024. Rates would be kept at the all-time lows that we saw last year at least until then.

Well, that didn’t last too long. As every investor would be aware, the RBA has now raised interest rates three times in 2022 thus far, and most rises have been ‘double’ increases of 50 basis points.

Ultra-low interest rates were good news for ASX shares. It’s hardly a coincidence that the volatility we have seen on the markets across FY2022 only really started occurring when it became obvious the RBA was going to jettison its 2024 commitment and start hiking rates this year.

So our first lesson from FY2022 is: don’t assume the RBA’s word is gospel.

Trends don’t last forever

The past decade has been one that has been especially kind to ASX tech shares. To illustrate, the S&P/ASX All Technology Index (ASX: XTX) rose an extraordinary 59.2% in 2020 and another 13% between January and November 2021.

It was a similar story with US tech shares. Back in January 2021, the BetaShares NASDAQ 100 ETF (ASX: NDQ) had a trailing five-year average performance of 22% per annum. So it seemed like a no-brainer to have at least a good chunk of one’s portfolio invested in tech shares.

But FY2022 has turned that on its head. Last financial year saw the All Tech index fall by a painful 35%. Investors didn’t get much of a safe harbour from US tech shares either. FY2022 saw the NDQ NASDAQ ETF fall by around 20%.

Many of the ASX’s most prominent tech shares fell by far more. For example, FY2022 saw Block Inc (ASX: SQ2), one of the largest ASX tech shares on the market, lose almost 49% of its value. Buy now, pay later (BNPL) share Zip Co Ltd (ASX: ZIp) plummetted more than 94%.

So even though a trend can last for years, and make ASX investors buckets of cash, do not ever think that it will go on forever. As we have seen, this assumption can be a painful one to keep.

Volatility can be an opportunity

Volatility can be uncomfortable and painful, but it can also bring us some incredible opportunities. To illustrate, let’s look at the Adairs Ltd (ASX: ADH) share price. Adairs shares have had an incredibly volatile year, with the company remaining down more than 45% over the past 12 months.

But if an investor took advantage of the volatility that saw Adairs drop to $1.65 a share just last month, they would be sitting on a giant of more than 26% today. Similar gyrations like this have occurred with dozens and dozens of ASX shares over FY2022.

This shows that volatility can be taken advantage of, and with lucrative results. But only for the ASX investors with the mindset to ‘be greedy when others are fearful’, as the great Warren Buffett would say.

The post What were some of the key lessons for ASX investors in FY22? appeared first on The Motley Fool Australia.

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More reading

• ASX 200 midday update: Zip scraps Sezzle merger, Lake Resources’ short seller attack
• ‘Gems in the chaos’: The outlook for ASX 200 shares in FY23
• The ASX sector set to pay out ‘massive record dividends’: fund manager
• 5 things to watch on the ASX 200 on Tuesday
• Could the Nickel Industries share price more than double from here?

Motley Fool contributor Sebastian Bowen has positions in ADAIRS FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended ADAIRS FPO, BETANASDAQ ETF UNITS, Block, Inc., and ZIPCOLTD FPO. The Motley Fool Australia has positions in and has recommended ADAIRS FPO, BETANASDAQ ETF UNITS, and Block, Inc. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Exciting news dropped over the last couple of days when Elon Musk officially announced he intends to back away from his Twitter (NYSE: TWTR) buyout deal. Musk’s lawyers say the company has refused to give them proper information regarding how many Twitter accounts are bots, meaning it broke its contractual obligations.

The main accusation is that the percentage of spam bots among the monetizable daily active users (mDAUs) is materially higher than the 5% number Twitter purports in its financial documents. Immediately after the announcement from the Musk team, Twitter’s board chair Bret Taylor tweeted (of course) that the company plans to take Musk to court to legally force him to close the deal at the agreed-upon price.

Here are two reasons Elon Musk will be legally forced to close the Twitter deal, and why he might slither out unscathed. 

1. The bots are not a legitimate excuse 

According to the letter Musk’s lawyers released, his main complaint is that Twitter’s bot problem is much worse than the company claims. If true, this would obviously be a huge problem, especially because Twitter’s main business is to sell advertisements to these users. Advertisers wouldn’t be very happy if it turned out a ton of them were fake.

While definitely a concern in a vacuum, it doesn’t seem likely this accusation will enable Musk to break off a signed merger agreement. For one, Musk clearly knew about the bot problem before he made the offer to Twitter — it was one of the reasons he wanted to buy the company in the first place. His account has a history of bots responding to his tweets trying to defraud people with cryptocurrency scams, so it is not like he was unaware of the problem.

Second, this was something a potential buyer is supposed to do before signing a deal. If you sign a contract to purchase a house at a certain price before going to inspect it in person, but then find cockroaches all over the place, you can’t just renege on the deal because you feel stupid. The Delaware Court (where the legal battle is set to take place) will likely rule the same way with Musk unless evidence materializes that a huge portion of Twitter’s active accounts is fake.

2. Historical legal precedent

Speaking of legal rulings, there are prior court cases that can guide us on what the Delaware Court may rule in this case. In 2000, Tyson Foods agreed to buy another food producer called IBP Corporation. When the market and economy went into a downturn in 2001 and 2002, Tyson tried to get out of the deal because it argued it had gotten misleading information about IBP’s business. Sound familiar?

The court argued that Tyson had to go through with the deal. The Tyson-IBP case has been a landmark decision, guiding companies, shareholders, and judges in deciding whether a merger agreement has to go through. With this in consideration, Musk will have to bring some incredibly compelling evidence to convince the Delaware Court to side with him on this case. 

Why Musk still might win

Don’t think this is a cinch for Twitter just yet. Anything and everything can happen in a legal battle, and there’s a reason Twitter’s stock trades below $37 a share when the proposed buyout was at $54.20. Musk’s team could find evidence that Twitter has been defrauding investors for years by lying about its bot problem. How likely is this? I’m not sure. But it definitely isn’t zero.

Investors should also consider Musk’s past history with the law. The Solar City deal, the fake take-private announcement for Tesla, and the one-million robotaxi claim have skirted, if not passed, the line of what is legal or not in the business world. Even if the precedent is for the court to rule against Elon Musk, it might not matter, because the man always seems to get what he wants.

Get your popcorn ready. The troubled Twitter takeout is shaping up to be one of the biggest legal battles in business history.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post 2 reasons Elon Musk’s Twitter break-up is destined to lose in court appeared first on The Motley Fool Australia.

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More reading

• Elon Musk doesn’t want to buy Twitter anymore, and neither should you

Brett Schafer has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Tesla and Twitter. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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The Core Lithium Ltd (ASX: CXO) share price is in reverse today following a resource statement from the company.

At the time of writing, the lithium developer’s shares are down 5.98% to 86.5 cents apiece.

It’s also worth noting that the company’s shares are down 30% in the past month after strong selling pressure in the lithium sector.

‘Significant increases’ to Finniss Lithium Project resource statement

Investors are shrugging off the latest positive release from the company, sending the Core Lithium share price into a funk.

According to the Australian Financial Review, it appears short sellers are placing bets that lithium companies will slump further. This has undoubtedly weighed on the entire industry, with all lithium companies deep in the red.

Earlier this morning, Core Lithium advised of significant increases in the Mineral Resource Estimate and Ore Reserve Estimate for its wholly-owned Finniss Lithium Project.

Management noted that a culmination of drilling and exploration efforts undertaken throughout the 2021 drilling season led to the update.

As such, the Mineral Resource Estimate improved by 28% to 18.9Mt (million tonnes) at 1.32% Li2O (lithium oxide).

Furthermore, the Ore Reserve Estimate for the project increased by 43% to 10.6Mt at 1.3% Li2O.

Core Lithium stated that construction and mining activities are ramping up with new equipment and people arriving on site.

The project is progressing and is currently on track to make its first lithium shipment by the end of 2022. It is expected that first concentrate production will commence soon after.

Management commentary

Core Lithium non-executive chair Greg English touched on the positive announcement, saying:

This is a tremendous outcome for Core and our shareholders and testament to the efforts of our operations and exploration teams as we focus on growing Finniss’ mine life and scale beyond last year’s DFS assumptions.

The new Ore Reserve Estimate has resulted in a 12-year mine plan. In parallel, our teams will complete the 2022 drilling campaign to see if it can deliver equally impressive results across both our open pit and underground deposits.

Most of the deposits at Finniss – including BP33, Carlton, Hang Gong, Ah Hoy and Sandras – remain open at depth and along strike and we are confident in the potential to deliver further significant increases to the Finniss resource and reserve position.

About the Core Lithium share price

Despite today’s losses, the Core Lithium share price has rocketed by around 300% over the past 12 months.

Investors rallied behind the company’s shares until April this year, when the company’s share price reached an all-time high of $1.675. However, since then, it has been in a slow and steady decline, pulled down by surrounding negative sentiment.

Core Lithium is roughly valued at $1.65 billion, making it the seventh biggest lithium company in terms of market capitalisation.

The post Why is the Core Lithium share price powering down 6% today? appeared first on The Motley Fool Australia.

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More reading

• ASX 200 midday update: Zip scraps Sezzle merger, Lake Resources’ short seller attack
• Why are these ASX 200 lithium shares tumbling today?
• Here are the 3 most heavily traded ASX 200 shares on Friday
• It’s been a crazy year for Core Lithium shares so far. What’s next?
• 5 best ASX All Ords mining shares in FY22

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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At lunch on Tuesday, the S&P/ASX 200 Index (ASX: XJO) is fighting hard to stay in positive territory. The benchmark index is currently up 0.3% to 6,620.5 points.

Here’s what is happening on the ASX 200 on Tuesday:

Zip cancels merger with Sezzle

The Zip Co Ltd (ASX: ZIP) share price is heading in the right direction at last. This follows a positive reaction to the buy now pay later (BNPL) provider’s decision to scrap its merger with rival Sezzle Ltd (ASX: SZL). While the decision is mutual, Zip will pay Sezzle a break fee of US$11 million. Sezzle shares have crashed 34% on the news, leaving it with a market capitalisation of approximately $80 million. The market appears to believe its days are numbered.

Lake Resources halts shares after J Capital attack

The Lake Resources N.L. (ASX: LKE) share price has been halted on Tuesday. This is so the embattled lithium developer can respond to a short seller report from J Capital. The research firm commented: “Lake is one of several lithium explorers planning to use an unproven direct lithium extraction (DLE) technology to remove lithium from brine.[…] We believe, however, DLE will still use large amounts of water and produce toxic waste. Lake has failed to get an operational pilot plant on site three years after promising it would.”

AP Eagers’ update

The Eagers Automotive Ltd (ASX: APE) share price is pushing higher today after the auto retailer released a half-year trading update. Eagers revealed that it expects to report a statutory net profit before tax from continuing operations of $246 million. This is ahead of its guidance range of $225 million to $240 million.

Best and worst ASX 200 performers

The best performer on the ASX 200 index has been the New Hope Corporation Limited (ASX: NHC) share price with a 5% gain. This follows a positive night of trade for coal prices. Going the other way, the Core Lithium Ltd (ASX: CXO) share price is the worst performer with a 6% decline. Weakness in the lithium industry has offset the release of a mineral resource update.

The post ASX 200 midday update: Zip scraps Sezzle merger, Lake Resources’ short seller attack appeared first on The Motley Fool Australia.

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More reading

• ‘Gems in the chaos’: The outlook for ASX 200 shares in FY23
• Zip share price jumps 6% after merger deal with Sezzle is cancelled
• Sezzle share price plunges 35% as Zip merger scrapped
• Lake Resources shares on watch amid short seller attack
• The ASX sector set to pay out ‘massive record dividends’: fund manager

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended ZIPCOLTD FPO. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The ASX cannabis sector had its growth clipped in FY22 with plenty of shares declining in the financial year.

Turning to FY23, the outlook is choppy. Investors are continuing to navigate the prospects of higher inflation and/or potential economic recession, putting growth at risk.

These trends have spilled over into the new financial year. On the charts, ASX cannabis shares are taking an absolute hammering.

Let’s take a look.

Industry growth trends bode well for ASX cannabis shares

All growing puns aside, Australia’s cannabis sector has been poised to grow by more than 80% year over year in CY22.

This growth could generate sales of more than $420 million, according to research conducted by FreshLeaf analytics, which has been researching Australia’s cannabis industry since 2017.

The report, not freely available, said consumer trends are shifting to acceptance of medicinal cannabis use. Access is also improving for patients.

It also said that “psychedelics are a big part of a new future growth narrative,” adding that government support will continue to play a large role through “down-scheduling”.

Meanwhile, the Australian legal cannabis market was sized at $75 million in 2021.

The market is expected to grow at a compound annual growth rate (CAGR) of 30% from 2022 to 2030, according to Grand View Research.

“Increased use of marijuana, mostly for medical purposes, is boosting total market growth as customers migrate from traditional treatment methods to cannabis-based treatment,” the report noted.

With growth potential on the horizon, this could weigh positively for several beaten-down ASX cannabis shares. These include Incannex Healthcare Ltd (ASX: IHL), Emyria Ltd (ASX: EMD) and Cronos Australia Ltd (ASX: CAU).

The returns of these ASX shares are shown below

The post Green shoots or just weeds? The outlook for ASX cannabis shares in FY23 appeared first on The Motley Fool Australia.

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More reading

• How did ASX cannabis shares perform in FY22?
• Here’s how ASX 200 healthcare shares performed in June
• 5 worst ASX All Ordinaries shares in June

Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Bitcoin (CRYPTO: BTC) miners are mothballing their specialised rigs in Texas as energy demand in the Lone Star state surges to records amid a scorching heatwave.

Texas is home to some of the biggest global crypto miners, including Argo Blockchain, Riot Blockchain, and Core Scientific.

The United States attracted a flood of new Bitcoin miners following China’s crackdown on crypto mining in early 2021.

Miners run massive series of computers to verify transactions on the blockchain, earning tokens in return. And the energy consumption is jaw dropping. The University of Cambridge estimates that in 2020 Bitcoin used as much energy as all of the Netherlands, a nation of 17 million people.

Crypto miners flock to Texas

Texas has become a particularly attractive location for the miners due to its relatively low electricity prices and limited regulations of the industry. And, as Bloomberg reports, the Electric Reliability Council of Texas (ERCOT) forecasts that crypto mining activity will continue to grow.

Miners are expected to increase their electricity demand by as much as six gigawatts by this time next year. That’s equivalent to the energy use of every home in Houston, a city of more than two million people.

Why are Bitcoin miners shuttering their rigs?

The shutdown in Texas will only last for the duration of the current, heat wave fuelled, energy shortages.

In an agreement with the state, miners need to shut down their equipment during times of scarce capacity.

Lee Bratcher, president of Texas Blockchain Association explained (quoted by Bloomberg):

There are over 1,000 megawatts worth of Bitcoin mining load that responded to ERCOTs conservation request by turning off their machines to conserve energy for the grid This represents nearly all industrial scale Bitcoin mining load in Texas and allows for over 1% of total grid capacity to be pushed back onto the grid for retail and commercial use.

Core Scientific has around 15% of its own Bitcoin machines operating out of Texas, with the rest spread across five other US states.

CEO Mike Levitt commented:

Currently, 100% of the machines located in Texas have been powered off to provide support for the ERCOT grid. In troubled situations including the current Texas heat event, we have been curtailing power and will continue to curtail power as needed.

Bitcoin miners across the world have come under pressure as the token – along with most every crypto – has collapsed in 2022.

Bitcoin is down 4% overnight, currently trading for US$19,955. The token reached all time highs of US$68,790 on 10 November last year.

The post Why are Bitcoin miners shutting down in Texas? appeared first on The Motley Fool Australia.

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More reading

• Is the Bitcoin price heading down to US$10,000? Here’s Wall Street’s take
• What went so right and so wrong for the Bitcoin price in the 2022 financial year?
• Why did the Bitcoin price crash 41% in June?
• Why Bitcoin stocks crashed (again) last month
• How did the price of crypto assets perform in June?

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Bitcoin. The Motley Fool Australia has positions in and has recommended Bitcoin. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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