Electricity consumption tied to Bitcoin and other digital currencies on computer networks could give a boost to some U.S. utilities and create partnership opportunities for renewable energy developers, says a Morgan Stanley report.
"Though the overall impact from increased demand seems minimal at this time, the key utility beneficiaries we would highlight include: American Electric Power ( AEP ), Xcel Energy ( XEL ), and Entergy ( ETR )," Nicholas Ashworth, a Morgan Stanley analyst, said in a report to clients published Wednesday. "These utilities serve the regions with the lowest cost of electricity, and American Electric Power and Xcel are taking advantage of low-cost wind (power) to drive rates even lower."
"There is also the potential for wind and solar developers, we would highlight NextEra Energy ( NEE ) and Pattern Energy ( PEGI ), to get involved in supplying 'firm' renewable power solutions to concentrated mining operations," Ashworth added.
Digital currency transactions require energy-intensive computer networks. A public ledger, called a blockchain , provides a record of where every digital token was first "mined" using computing power. For Bitcoin, verifying a transaction and adding it to the blockchain earns a miner a specific number of bitcoins.
By design, Bitcoin mining software makes it very expensive - in terms of computing power and electricity - to add new blocks. Cryptocurrency power use is facing more scrutiny, particularly in China, where officials are concerned miners are taking advantage of low electricity prices.
Some parts of the U.S. - such as the Midwest and Northwest - could also offer mining networks low power costs, Ashworth said in the report.
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"Electricity consumption from Bitcoin in 2018 could be as great as we forecast for global electric vehicles in 2025," added the Morgan Stanley report.
"However in theory Bitcoin's energy usage should decline in the long run. The network is designed to produce one block every ten minutes, regardless of energy use. The bitcoin reward for mining a block however halves every four years - the next time is in 2020. If it becomes unprofitable to mine, then in theory less mining will occur."
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