fire

Patrick

BlackRock

The world's largest asset manager has a warning for crypto investors heading into Wednesday's inflation report.
The worst of the energy shock may not have hit the numbers yet.
In its latest weekly <a href="https://www.blackrock.com/us/individual/insights/blackrock-investment-institute/weekly-commentary" rel="noopener noreferrer nofollow">market commentary</a>, the BlackRock Investment Institute said the May United States consumer price index (CPI), scheduled to be published on June 10, will offer the first clear read on how the U.S.-Israel-Iran conflict is feeding into already sticky inflation.&nbsp;
<blockquote>
 "The full breadth of the shock has yet to show and will depend on how it evolves," the firm warned.
</blockquote>
<a href="https://www.thestreet.com/crypto/markets/blackrock-reveals-bold-call-on-the-stock-market-rally" rel="noopener noreferrer nofollow">Related: BlackRock reveals bold call on the stock market rally</a>
<h2 id="the-strait-of-hormuz-is-the-real-wildcard">The Strait of Hormuz is the real wildcard</h2>
BlackRock's biggest concern is timing.
<blockquote>
 "We think a prolonged closure of the Strait of Hormuz into July could bring the impact of the shock to the fore more prominently, especially as U.S. oil inventories potentially hit four-decade lows," the note read.&nbsp;
</blockquote>
That kind of supply squeeze would ripple far beyond gas pumps and stock tickers. It would also land squarely on <a href="https://www.thestreet.com/crypto/markets/analyst-reveals-a-surprising-winner-in-the-ai-race" rel="noopener noreferrer nofollow">Bitcoin mining</a>.
Mining Bitcoin means running warehouses of high-powered computers around the clock, and that takes enormous amounts of energy. The network consumes roughly <a href="https://www.thestreet.com/crypto/markets/strait-of-hormuz-is-choking-bitcoin-not-just-oil-but-theres-a-catch" rel="noopener noreferrer nofollow">211.58 terawatt-hours</a> a year, according to Cambridge data, with nearly half still drawn from fossil fuels, mostly natural gas.
Yet miners may be quietly winning the energy fight, according to <a href="https://www.thestreet.com/crypto/markets/bitcoin-miners-are-quietly-winning-the-energy-fight-according-to-bitkerns-coo" rel="noopener noreferrer nofollow">Patrick Stich, </a>COO of Austria-based Bitkern Group, which runs more than a dozen sites across multiple continents. Stich argues that a miner's superpower is the ability to switch off instantly.
Bitkern has power agreements that allow utilities to shut its machines down for up to 600 hours a year, freeing electricity for homes and industry.&nbsp;
During severe storms in Iowa and Nebraska, Stich said, the company went dark for a week so families could keep their heat and lights on.
That flexibility is exactly what energy providers pay for, and it's something an <a href="https://www.thestreet.com/crypto/markets/popular-tech-stock-surges-after-new-data-center-announcement" rel="noopener noreferrer nofollow">AI data center</a> can't match since they must stay online all the time.
<h3 id="trending-on-thestreet-roundtable">Trending on TheStreet Roundtable</h3>
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<h2 id="why-crypto-is-in-the-line-of-fire">Why crypto is in the line of fire</h2>
A hotter CPI reading would be another reminder that prices remain stuck well above the Federal Reserve's 2% target.
If this continues, the Fed might look at a rate hike rather than a cut. So far, as per the <a href="https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html" rel="noopener noreferrer nofollow">CME FedWatch tool </a>shows a 98% chance&nbsp;<a href="https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html" rel="noopener noreferrer nofollow"></a>that new Fed chair Kevin Warsh would keep the rates unchanged in the upcoming FOMC meeting on June 17.&nbsp;
For crypto, that's bad news. Higher borrowing costs make investors less willing to chase risky assets like Bitcoin, and a hot CPI could pile on more selling pressure. Bitcoin had a rough last week, where it dipped to under $60,000.
<a href="https://www.thestreet.com/crypto/policy/after-gdp-u-s-may-put-cpi-data-on-blockchain-according-to-mike-cahill" rel="noopener noreferrer nofollow">Related: After GDP, U.S. may put CPI data on blockchain, according to Mike Cahill</a>

BlackRock issues blunt warning ahead of CPI data

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