How Do Fluctuating Energy Prices Affect the Decision to Enter into Long-Term Power Purchase Agreements (PPAs)?
Fluctuating energy prices increase the risk and uncertainty of a miner's largest operational expense. To mitigate this, mining firms often enter into long-term Power Purchase Agreements (PPAs) with energy producers.
A PPA locks in a fixed or predictable electricity price for an extended period, providing cost certainty and allowing the firm to accurately forecast profitability. This stability is critical for large-scale, capital-intensive mining operations.
