2024-05-28 14:03

May 28 - With mining rewards halved, mining difficulty elevated and the shiny new bitcoin exchange-traded funds (ETFs) stealing investor capital, it's been a tough year for bitcoin miners. Marathon Digital (MARA.O) New Tab, opens new tab and Riot Platforms (RIOT.O) New Tab, opens new tab, among the biggest U.S.-listed miners, have dropped about 10% and 33% respectively so far this year, even as bitcoin has climbed 60% year-to-date to $67,859, after hitting a record level in March. Mining stocks closely track bitcoin as a higher price boosts their profits margins. However, market analysts said the launch of the 11 bitcoin ETFs at the start of this year prompted some investors to rotate out of mining stocks - earlier among the few stocks offering exposure to bitcoin - in favour of the ETFs that track the spot price. "There's been a lot of institutional money flow into the ETFs as opposed to using the miners as a proxy for exposure to bitcoin," said Pascal St-Jean, president at the global digital asset investment manager 3iQ. Power-hungry miners compete to solve complex mathematical puzzles to build the bitcoin blockchain and earn rewards in the form of new bitcoin. Their rewards were halved in April to 3.26 bitcoin per block in a technical adjustment that occurs roughly every four years, designed to reduce the rate at which new bitcoins are created. As a result, miners revenue per transaction has fallen from over $192 in March to just $60 currently, the lowest since last September, as per Blockchain.com data. Bitcoin's network difficulty - a measure of how difficult it is to mine one bitcoin block - has climbed fairly steadily since the start of the year, as per Blockchain.com data, touching an all-time high in early May. "Miners have to work hard to increase their efficiency, which typically involves spending on better hardware," said David Morrison, analyst at brokerage Trade Nation. The 14 U.S.-listed miners, which account for 23% of the global bitcoin mining power, are better positioned to take advantage of the new environment, J.P.Morgan said in May. This is mainly due to greater access to funding and, in particular, equity financing which "helps them to scale their operations and invest into more efficient equipment," J.P.Morgan analysts said. The listed bitcoin miners raised more than $3 billion in equity capital in the first quarter of 2024, the most in the past two years, J.P.Morgan added. To rein in energy costs some players are resorting to moving their operations to countries where energy prices are more affordable, and governments friendlier to digital assets. "We are less optimistic about the U.S. because of the ... potential risks like tax discussions," said Youwei Yang, chief economist at Bit Mining, who noted new establishments in Ethiopia. M&A AND DATA CENTRE EXPANSION As their revenue falls, market analysts expect to see more mergers among bitcoin miners, where those with more capital target less efficient miners to stay competitive. CleanSpark (CLSK.O) New Tab, opens new tab has purchased more mining rigs and acquired smaller mining facilities at the beginning of the year. "The market remains bifurcated with companies that have access to capital in a position to grow, while those less fortunate most likely selling owing to reduced revenues post the halving," said Gregory Lewis, analyst at brokerage BTIG that covers the U.S.-listed bitcoin miners. In search of more revenue, some crypto mining companies are hitching their wagon to the artificial intelligence craze, taking advantage of their existing stashes of energy hungry computing power to meet the needs of AI systems. Miners such as Bit Digital (BTBT.O) New Tab, opens new tab, Hut8 Iris Energy (IREN.O) New Tab, opens new tab and Core Scientific (CORZ.O) New Tab, opens new tab have ventured into AI services or high-performance computing. "There are just too many bitcoin mining operators operating subscale, while demand for generative AI and computation dense data centers continues to grow and create competition for land and power," said Bernstein analyst Gautam Chhugani said. Sign up here. https://www.reuters.com/business/finance/cryptoverse-miners-trudge-through-post-halving-world-2024-05-28/

2024-05-28 12:40

SHANGHAI, May 28 (Reuters) - China's BYD (002594.SZ) New Tab, opens new tab launched on Tuesday the latest version of a plug-in hybrid technology that improves fuel and cost savings, intensifying competition with the likes of Toyota and Volkswagen that still sell mainly gasoline cars. BYD's chairman Wang Chuanfu unveiled the fifth generation of the hybrid technology that achieves a record low fuel consumption of 2.9 litres per 100 km (62.1 miles) on depleted batteries at an event in Shaanxi province's capital Xian. With a fully charged battery and a full gasoline tank, the technology can ensure a driving range of 2,100 kilometers, Wang said in the city where the company's first automaking factory was located. BYD also launched sedan versions of its Qin L and Seal 06 models, both equipped with the new technology and priced from 99,800 yuan ($13,775). Customers using the new technology can save up to 9,682 yuan a year in fuel costs compared to those who drive gasoline models, the company said. BYD's last generation of plug-in hybrid technology - which touts a driving range of dozens of kilometers on batteries and a fuel consumption of 3.8 litres per 100 km purely on the gasoline engine - has buoyed its rapid growth since 2021 with models such as the Qin Plus DM-i sedan and Song Plus DM-i SUV. Plug-in hybrids priced from 79,800 yuan have made up the bulk of BYD's sales in the past three years, with an accumulated 3.6 million such cars sold by the company. The Chinese company slashed prices of its plug-in hybrids by 10%-22% in the first quarter, with Qin and Song outselling gasoline models such as Lavida and Sagitar in the mass market with lower prices and less fuel consumption attracting cost-sensitive Chinese buyers. Globally, BYD, which has been accelerating its international expansion, still trails multi-branded automakers including Toyota (7203.T) New Tab, opens new tab, Volkswagen (VOWG_p.DE) New Tab, opens new tab, General Motors (GM.N) New Tab, opens new tab and Stellantis (STLAM.MI) New Tab, opens new tab in sales. BYD, together with other Chinese EV makers, is posing more of a challenge to Japanese automakers in overseas markets such as Southeast Asia, Australia and Middle East, where governments impose fewer trade barriers and tariffs. Toyota also showcased on Tuesday next-generation engines which it said would be compatible with alternative fuel sources such as e-fuels and biofuels to reduce carbon emissions and revamp vehicle design by allowing for lower hoods. Unlike the hybrid technology Toyota pioneered with the Prius in 1997, the plug-in hybrids led by Chinese automakers use larger battery packs and can drive much longer on electricity. ($1 = 7.2448 Chinese yuan renminbi) Sign up here. https://www.reuters.com/business/autos-transportation/byd-launches-new-hybrid-vehicle-tech-with-lower-fuel-consumption-2024-05-28/

2024-05-28 12:01

MOSCOW, May 28 (Reuters) - Russia is not currently planning to restart the Zaporizhzhia nuclear power plant in Ukraine, the head of Russia's state-owned nuclear power company Rosatom was quoted as saying on Tuesday. Russian forces have occupied the Zaporizhzhia plant since early in what Russia calls its special military operation in Ukraine, and its six reactors are not in operation. Russian state-run news agency TASS said Rafael Grossi, the head of the International Atomic Energy Agency (IAEA), had held talks with a Rosatom delegation in the western Russian city of Kaliningrad at which he said an understanding was reached on the safety of the plant. TASS said Rosatom chief Alexei Likhachev had underlined the importance of the plant's safety and that restarting it was not currently on the agenda. Environment group Greenpeace, citing documents it said were submitted by Rosatom to the IAEA in mid-May, had said Russia was planning to restart the plant and that this could be fraught with "unprecedented escalation." Russia and Ukraine have accused each other at various times of shelling what is Europe's largest nuclear power plant. Both deny the accusations. The IAEA, the United Nations' nuclear watchdog, has said the plant has been experiencing off-site power problems since Russia sent troops into Ukraine in February 2022, increasing security risks at the site. Sign up here. https://www.reuters.com/world/europe/russia-not-currently-planning-restart-zaporizhzhia-nuclear-power-plant-tass-says-2024-05-28/

2024-05-28 12:00

LAUNCESTON, Australia, May 28 (Reuters) - The balance of risks for iron ore prices are tilted to the downside despite top buyer China's most recent steps to boost its struggling property sector. A series of stimulus measures announced earlier this month will see up to 1 trillion yuan ($138 billion) in new property funding, an easing of mortgage rules and allowing local governments to buy some apartments in order to clear overhangs. The spot price of iron ore was initially boosted by the policy support for housing, with Singapore-traded futures gaining nearly 2% to reach a two-week high of $119.20 a metric ton in the three trading sessions after the May 17 announcement. But the contract has since meandered and ended at $118.04 a ton on Monday. The issue for the market is how quickly does the extra support for the property sector translate into higher steel demand, and thus demand for iron ore, the key raw material. The concern is that even if the new measures are successful in reviving a sector that at one stage accounted for a quarter of China's gross domestic product, it will take at least several months, and likely far longer, for new construction to meaningfully boost steel demand. This means demand for iron ore in China, which buys almost 75% of global seaborne volumes, will stay largely dependent on other sectors, such as manufacturing and infrastructure. Here the news is mixed, with some parts of the world's second-biggest economy performing well, and others continuing to struggle. Industrial profits returned to growth in April, rising 4.0% after declining 3.5% in March, leaving them 4.3% higher over the first four months of 2024 compared to the same period a year earlier. The rising profits came as industrial output grew 6.7% year-on-year in April, largely as a result of strong exports. However, retail sales remained soft, gaining just 2.3% in April, the lowest since December, while credit growth fell more than expected to 730 billion yuan in April, down from 3.09 trillion yuan in March. FUNDAMENTALS EASE The uncertain economic signals mean that iron ore is likely to take more direction from fundamentals, and the picture is far from bullish. China's imports of iron ore are likely to be steady in May from April, with commodity analysts Kpler estimating arrivals of 101.48 million tons, compared to the official figure of 101.82 million for April. However, within that largely steady volume there are some bearish signals, with iron ore inventories at Chinese ports rising, with consultants SteelHome saying they reached 144.65 million tons in the week to May 24. This was up from 144.50 million the previous week and close to the two-year high of 145.15 million reached in the week to May 10. It's worth noting that the usual seasonal pattern for iron ore stockpiles is that they decline in the second quarter as steel mills normally ramp up output ahead of the peak summer construction period. But steel production has been soft, with crude steel output dropping to 85.94 million tons in April, down 2.6% from march and 7.2% from April 2023. For the first four months of the year China produced 343.67 million tons of steel, down 3% from the same period in 2023. It's likely that May will see a recovery in steel production as mills ramp up output in the expectation of stronger summer demand, but whether this will be enough to spark renewed optimism in iron ore remains in doubt. The opinions expressed here are those of the author, a columnist for Reuters. Sign up here. https://www.reuters.com/markets/commodities/iron-ore-prices-lack-conviction-despite-china-stimulus-moves-russell-2024-05-28/

2024-05-28 11:35

NEW DELHI, May 28 (Reuters) - India's Reliance Industries (RELI.NS) New Tab, opens new tab, operator of the world's biggest refining complex, has signed a one-year deal with Russia's Rosneft to buy at least 3 million barrels of oil a month in roubles, four sources aware of the matter told Reuters. The shift to rouble payments follows Russian President Vladimir Putin's push for Moscow and its trading partners to find alternatives to the Western financial system to facilitate trade despite U.S. and European sanctions. A term deal with Rosneft also helps privately run Reliance to secure oil at discounted rates at a time when the OPEC+ group of oil producers is expected to extend voluntary supply cuts beyond June. The OPEC+ group comprising the Organisation of the Petroleum Exporting Countries (OPEC) and allies including Russia is due to discuss the output cuts in an online meeting on June 2. India, the world's third-biggest oil importer and consumer, has become the biggest buyer of seaborne Russian crude since the West halted purchases and imposed sanctions against Moscow in the aftermath of Russia's 2022 invasion of Ukraine. India has also paid for Russian crude in rupees, dirhams and Chinese yuan. State-owned Indian refiners, meanwhile, have been tapping spot markets for Russian oil because they were unable to finalise term supplies for this year, Reuters has reported previously. "India is a strategic partner for Rosneft oil company," the Russian company said in an emailed response to questions from Reuters, adding that it does not comment on confidential agreements with partners. "Cooperation with Indian companies includes projects in the field of production, oil refining and trading of oil and petroleum products." Rosneft also said that commercial approaches to determining the value of sold crude are the same for all companies, regardless of whether they are private or state-controlled. Reliance did not respond to a request for comment. Under the terms of the deal, which took effect at the beginning of the Indian financial year from April 1, Reliance will buy two cargoes of about one million barrels of Urals crude with an option to buy four more each month at a discount of $3 a barrel to the Middle East Dubai benchmark, the sources said. The refiner will also purchase one to two cargoes a month of low-sulphur crude oil, mainly ESPO Blend exported from Russia's Pacific port of Kozmino, at a premium of $1 a barrel to Dubai quotes, the sources added. Reliance has agreed to make payment for the oil using Russia's rouble through India's HDFC Bank (HDBK.NS) New Tab, opens new tab and Russia's Gazprombank (GZPRI.MM) New Tab, opens new tab, the sources said. Further details on the payment mechanism were not immediately available. HDFC Bank and Gazprombank did not respond to requests for comment. Sign up here. https://www.reuters.com/markets/commodities/indias-reliance-buy-russian-oil-roubles-sources-say-2024-05-28/

2024-05-28 11:32

May 28 (Reuters) - Private equity firm Energy Capital Partners will buy Atlantica Sustainable Infrastructure (AY.O) New Tab, opens new tab for $2.56 billion in cash, the utility said on Tuesday, in a deal that will give its biggest shareholder funds to lower its debt. Atlantica, which started a strategic review in February last year, will get $22 per share, a near 19% premium to the closing price on April 22, the last trading day before speculation over the UK-based company's possible takeover started. The price, however, is a 6.1% discount according to Atlantica shares' closing price in the previous session. The stock fell 7.6% in pre-market trade on Tuesday. Algonquin Power & Utilities (AQN.TO) New Tab, opens new tab, which holds about 42.2% of Atlantica shares, said it supports the acquisition. The deal values Algoquin's stake at about $1.08 billion. Last year, Algonquin started its own strategic review of its renewable energy division, which includes the Atlantica stake, under pressure from activist firms including Corvex Management and Starboard Value. "(Algonquin) expects the proceeds will be used to help reduce debt and recapitalize its balance sheet as part of its ongoing strategic transition to a pure play regulated utility," it said in a statement. The transaction is expected to close in the fourth quarter of 2024 or early first quarter of 2025. Atlantica owns a portfolio of assets across the United States, Europe, South America and Africa, dealing with renewable energy like wind, solar and natural gas. Sign up here. https://www.reuters.com/markets/deals/energy-capital-partners-acquire-atlantica-25-bln-2024-05-28/