Bitcoin energy demand in 2018 could match Argentina – Morgan Stanley

By Mamta Badkar

Electricity consumption for bitcoin this year could be as great as or even exceed that used by global electric vehicles in 2025 and Argentina, said Morgan Stanley.

Bitcoin, the cryptocurrency du jour, is mined by solving complex maths problems whose solutions are used to validate new transactions that are added to the blockchain ledger. And all that mining requires a large amount of computational energy use.

“Bitcoin power demand in 2018 (c.120-140TWh equating to 0.6% of world consumption, or consumption of Argentina) will, in our view, be bigger than our projected global EV demand in 2025 (c.125TWh), but is still small on an absolute basis and will not likely have a material impact on utility stocks any time soon,” analysts at Morgan Stanley noted.

While they don’t see crypto power consumption moving the needle for global utilities just yet they note that bitcoin demand “may represent a new business opportunity for renewable energy developers and that many utility companies like NextEra, Iberdrola, Enel and even Big Oil is moving into the renewables space.

Morgan Stanley estimates the cost of creating an individual Bitcoin at between $3,000 to $7,000. And low cost regions are likely to be favoured for mining namely Mexico, Norway, China, Canada and the US. However, China is already moving to clamp down on the country’s bitcoin mining industry over concerns about both excessive electricity consumption and financial risk and miners are now thought to be seeking ways to transfer their operations abroad, either by physically moving factories or selling their expertise.

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