Power Markets

Impact of Gas Globalization on US Markets

Power Markets for Bitcoin Miners, 10/30/23

David Bellman

Key Takeaway #1

The forecasting of power prices – already a complex endeavor – requires a global view in light of escalating geopolitical conflict.

Key Takeaway #2

The growth of LNG exports and the potential expansion of regional conflict to affect some of the world’s largest exporters will have an impact on US markets as well.

Key Takeaway #3

Mining economics improved week on week.

Key Takeaway #4

Henry Hub ended the week up, NY-G was slightly down, and the other power markets saw only minor changes WoW.

The globalization of natural gas will have a significant impact on US gas and power prices. The forecasting of power prices – already a complex endeavor – requires a global view in light of escalating geopolitical conflict. The US market post-2016 has had limited connection to global gas markets other than for imports in the winter for the Northeast, but the growth of LNG exports and the potential expansion of regional conflict to affect some of the world’s largest exporters will have an impact on US markets as well.

These periods of increased global tension should lead to higher levels of hedging. The US market is protected by higher foreign power prices, but this is dependent on the continuation of natural gas fracking. This means that US domestic policy – in addition to foreign conflict – could conceivably affect US gas prices. Given the rising global tension and next year’s US elections, it would be prudent to hedge more than one usually does. BitOoda knows all aspects of the mining and energy value chains, and we are well positioned to help you hedge, plan, and execute.

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The globalization of natural gas will have a significant impact on US gas and power prices. The forecasting of power prices – already a complex endeavor – requires a global view in light of escalating geopolitical conflict. The US market post-2016 has had limited connection to global gas markets other than for imports in the winter for the Northeast, but the growth of LNG exports and the potential expansion of regional conflict to affect some of the world’s largest exporters will have an impact on US markets as well.

These periods of increased global tension should lead to higher levels of hedging. The US market is protected by higher foreign power prices, but this is dependent on the continuation of natural gas fracking. This means that US domestic policy – in addition to foreign conflict – could conceivably affect US gas prices. Given the rising global tension and next year’s US elections, it would be prudent to hedge more than one usually does. BitOoda knows all aspects of the mining and energy value chains, and we are well positioned to help you hedge, plan, and execute.

LNG Exports & Imports

• Over the past 7 years, export capabilities have expanded to over 10 bcf/day.

• This is expected to double by 2028 and corresponds with the exports of LNG.

LNG Exports & Geopolitics

• This means geopolitics increasingly matter for your risk assessments. The current Israel/Palestine impact If the ongoing Israel-Palestine conflict expands across the region to countries like Qatar and Iran, there will be a dramatic impact on global natural gas.

• Qatar is the largest exporter of LNG. In addition, around 25% of LNG movement goes through the Strait of Hormuz, which is easily accessible to Iran.

LNG Prices: U.S. vs. Global

• The US is a net exporter of LNG as a result of fracking. As long as we can maintain high production, price spikes will be limited to extreme demand times.

• However, if a policy banning fracking is implemented, US power and gas could be increasingly tied to global dynamics.

• Global prices are significantly higher than the US. In Europe, gas prices are over $12/mmbtu higher than the US – this is over 3X.

• Applying this type of scenario in the US could double power prices.

Miner WoW View

• Mining economics improved week on week.

• The S19JPro breakeven price jumped to between $70-$80/MWh with BTC price surging to over $30K.

Henry Hub WoW

• Henry hub ended the week up.

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.

• PJM prices saw minor changes WoW.

ERCOT WoW

• For the ERCOT region, we use ERCOT-North hub as the benchmark. ERCOT-North is the most traded power hub for ERCOT.

• ERCOT changed mostly in the winter WoW.

‍

CAISO WoW

• For the CAISO region, we use SP-15 hub as the benchmark. SP-15 is located in Southern California.

• CAISO saw minor changes WoW.

‍

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.

• NY-G prices are slightly down.

NYISO WoW: NY-A

• This slide adds NY-A for the NYISO region.

• NY-A prices saw minor changes.

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

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 throughhttp://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 byOoda 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.

The globalization of natural gas will have a significant impact on US gas and power prices. The forecasting of power prices – already a complex endeavor – requires a global view in light of escalating geopolitical conflict. The US market post-2016 has had limited connection to global gas markets other than for imports in the winter for the Northeast, but the growth of LNG exports and the potential expansion of regional conflict to affect some of the world’s largest exporters will have an impact on US markets as well.

These periods of increased global tension should lead to higher levels of hedging. The US market is protected by higher foreign power prices, but this is dependent on the continuation of natural gas fracking. This means that US domestic policy – in addition to foreign conflict – could conceivably affect US gas prices. Given the rising global tension and next year’s US elections, it would be prudent to hedge more than one usually does. BitOoda knows all aspects of the mining and energy value chains, and we are well positioned to help you hedge, plan, and execute.

LNG Exports & Imports

• Over the past 7 years, export capabilities have expanded to over 10 bcf/day.

• This is expected to double by 2028 and corresponds with the exports of LNG.

LNG Exports & Geopolitics

• This means geopolitics increasingly matter for your risk assessments. The current Israel/Palestine impact If the ongoing Israel-Palestine conflict expands across the region to countries like Qatar and Iran, there will be a dramatic impact on global natural gas.

• Qatar is the largest exporter of LNG. In addition, around 25% of LNG movement goes through the Strait of Hormuz, which is easily accessible to Iran.

LNG Prices: U.S. vs. Global

• The US is a net exporter of LNG as a result of fracking. As long as we can maintain high production, price spikes will be limited to extreme demand times.

• However, if a policy banning fracking is implemented, US power and gas could be increasingly tied to global dynamics.

• Global prices are significantly higher than the US. In Europe, gas prices are over $12/mmbtu higher than the US – this is over 3X.

• Applying this type of scenario in the US could double power prices.

Miner WoW View

• Mining economics improved week on week.

• The S19JPro breakeven price jumped to between $70-$80/MWh with BTC price surging to over $30K.

Henry Hub WoW

• Henry hub ended the week up.

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.

• PJM prices saw minor changes WoW.

ERCOT WoW

• For the ERCOT region, we use ERCOT-North hub as the benchmark. ERCOT-North is the most traded power hub for ERCOT.

• ERCOT changed mostly in the winter WoW.

‍

CAISO WoW

• For the CAISO region, we use SP-15 hub as the benchmark. SP-15 is located in Southern California.

• CAISO saw minor changes WoW.

‍

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.

• NY-G prices are slightly down.

NYISO WoW: NY-A

• This slide adds NY-A for the NYISO region.

• NY-A prices saw minor changes.

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

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 throughhttp://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 byOoda 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.

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Impact of Gas Globalization on US Markets

Power Markets for Bitcoin Miners, 10/30/23

Key Takeaway #1

Key Takeaway #2

Key Takeaway #3

Key Takeaway #4

Premium Content

Table of contents

Research By

Key Metrics

LNG Exports & Imports

LNG Exports & Geopolitics

LNG Prices: U.S. vs. Global

Miner WoW View

Henry Hub WoW

PJM WoW

ERCOT WoW

CAISO WoW

NYISO WoW: NY-G

NYISO WoW: NY-A

Disclosures

Table of contents

Research By

Key Metrics

LNG Exports & Imports

LNG Exports & Geopolitics

LNG Prices: U.S. vs. Global

Miner WoW View

Henry Hub WoW

PJM WoW

ERCOT WoW

CAISO WoW

NYISO WoW: NY-G

NYISO WoW: NY-A

Disclosures

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