Copper Hits 2021 Squeeze Levels: What It Means for Bitcoin Miners and the AI Boom

Key Takeaways 

• The LME copper spot premium reached $478 per ton over the three-month contract, its widest level since the 2021 supply squeeze.

• LME inventories have declined for 42 consecutive days, while almost half of the remaining copper is already scheduled for withdrawal.

• Copper shortages could raise construction and expansion costs for Bitcoin miners, particularly for cabling, transformers, substations and grid connections.

Copper's steepest supply squeeze since 2021 is sending a warning across two electricity-hungry industries: Bitcoin mining and artificial intelligence.

The London Metal Exchange's cash copper contract traded as much as $478 per ton above the three-month contract on Monday. Such backwardation signals that buyers are paying unusually high premiums for immediately available metal.

The move followed a $370-per-ton front-month premium on Friday and came as LME inventories declined for a 42nd consecutive day, the longest withdrawal streak since 2014. Stockpiles fell to 204,975 tons, with almost half already earmarked for removal.

Copper prices have consequently gained nearly 16% this year, with the three-month contract reaching $14,360.50 per ton and approaching January's record of $14,527.50.