After witnessing Bitcoin's explosive growth, everyone and their uncle is now getting into cryptocurrency mining, some for extra money and others in hopes of striking it rich. There are now more than a thousand cryptocurrencies out there. With new miners now showing up in droves (and existing ones expanding their operations), the collective power consumption could be on track to outpace the needs of electric vehicles.
Morgan Stanley analysts led by Nicholas Ashworth wrote in a note that cryptocurrency mining could require up to 140 terawatt-hours of electricity in 2018. To put that into perspective, that figure is in line with the total electricity consumption of Argentina, and is 0.6 percent of the global total. It also exceeds the amount of power that electric cars are expected to collectively consume in 2025.
Despite the amount of power being used, it's still not enough to spark increased interest in global utility shares. However, it could drive growth in companies that are investing in wind and solar power combined with energy storage, such as NextEra Energy Inc., Iberdola SA, and Enel SpA, the note says. Big oil companies could benefit as well as they invest in renewable energy.
Location is the key,and looking at the cost of things, miners are likely to focus their attention in China and the US Midwest and Pacific Northwest. There is also a play being made in Canada by Hydro-Quebec, Canada's largest electric utility. The company is in "very advanced" talks with over 30 cryptocurrency miners, many of which are currently operating in China. Hydro-Quebec expects to be serving miners around 5 terawatt-hours of electrics annually within the next four years.
All of this assumes there is no burst to the cryptocurreny bubble at large, as some expect to happen. Bitcoin miners and investors aren't too concerned with that, however, as they have been hearing about it for several years now, particularly whenever there is a drop in value. So far, Bitcoin has been able to recover from every blip and recently reached a high of over $17,000.