German economy under heavy pressure as energy prices soar

Last Updated: 29 August 2022

Germany is heading at high speed towards a severe energy crisis that has the potential to put pressure on the entire economy. On the futures market, energy prices for the coming year have begun a parabolic rise, increasing by 720 percent from the beginning of 2022.

Energy-intensive companies in trouble

With these increases, companies that depend on energy for a significant part of their business are particularly in trouble. If that is your biggest cost and you see it rise by 720 per cent on an annual basis, the balance sheet must be very strong to survive.

If something is not done quickly in Germany, the country could find itself in big trouble, and that applies not only to companies. Individuals, too, have to pay their energy bills every month, and people who are already struggling might face a cold winter as a result.

It seems that at least Germany has underestimated the conflict in Ukraine, and the consequences of the sanctions. In this respect, Russia has the main economy of Europe in a vice-like grip, which is not good for the continent. A country cannot run without energy, and we are now clearly seeing the ensuing panic reflected in energy prices.

What does this mean for bitcoin?

Basically, in terms of mining, this doesn’t mean much for bitcoin. Germany has never had the energy prices that make it attractive for individuals or companies to mine in Germany. For the bitcoin price, it can have an impact though.

People simply have less money left to invest, and certainly, if the entire economy comes under pressure, everyone will probably flee to the euro. After all, that is the currency in which people in Germany have to pay their bills.

Inflation and crises are never good for the prices of financial assets, and this development is no exception. If things come under pressure in Germany, the rest of Europe will feel it too, and our continent is a major driver of bitcoin prices. So, all in all, this is a very dark development for bitcoin.

Author

  • Ivan came across the topic of cryptocurrencies in early 2016 and, as an author and enthusiast, has been intensively involved with the topics of cryptocurrencies, blockchain and STOs ever since.

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