By Justin Spittler, editor, Casey Daily Dispatch
Miners are destroying the planet.
Anyone investing in resource companies has heard this before. Companies that dig stuff out of the ground get a bad rap. Environmentalists love to hate them.
But I’m not talking about traditional resource companies. I’m talking about cryptocurrency “miners.”
In a minute, I’ll tell you why some people believe crypto miners pose a grave threat to the economy. I’ll also show you how to turn this public relations nightmare into fat profits.
But first, I need to address the elephant in the room.
• What the heck is a cryptocurrency miner?
A lot of people have trouble wrapping their heads around this idea, and that’s because cryptos aren’t tangible. They’re digital assets.
So you obviously can’t mine them the same way that you would copper or gold. Instead, people mine cryptocurrencies by using computers to solve complex math problems. If you do this successfully, you earn a reward and get paid.
But here’s the thing. These computers don’t do anything that complex. They basically just guess numbers until they get lucky.
In other words, they use brute force. And that requires a lot of computing power and energy.
• And when I say a lot, I mean A LOT…
Today, mining one bitcoin requires about as much energy as a four-person house in Germany consumes in one year.
That’s a big problem.
After all, a lot of people are mining bitcoin right now. As a result, experts estimate that bitcoin miners will use 130 terawatts of energy this year. That’s as much energy as the entire country of Argentina consumes in a year.
That alone is reason for concern. But get this… The problems that miners solve to mine bitcoin will become exponentially more difficult over time. So each new bitcoin requires more energy to mine than the last.
• Not only that, but bitcoin is just one cryptocurrency…
There are thousands of others just like it. And many of them must be mined into existence.
This is why many environmentalists hate cryptocurrencies. They think that crypto mining will end up boiling the oceans.
But here’s the thing. The massive amounts of energy required to mine cryptos isn’t just a potential threat to the environment. It’s a huge problem for the miners. And there’s a simple reason for this…
• Consuming massive amounts of energy isn’t cheap…
In the United States, it costs around $4,758 to mine a single bitcoin. In Brazil, it’s $6,741. In Japan, it’s $8,723. That’s higher than bitcoin’s current price.
Now, you could mine bitcoin for much cheaper if you went to Iran, Venezuela, or Ukraine. But then you’d have even bigger problems to worry about.
• So, many crypto miners are turning to renewable energy…
That’s because renewable energy is becoming dirt cheap.
Solar energy, as I explained on Friday, is now less than half as expensive as coal power. The cost of wind power has plunged in recent years, and is now competitive with coal and natural gas.
The same goes for hydroelectric and geothermal energy. In fact, one of the world’s largest crypto miners has set up shop in Iceland to take advantage of the country’s cheap geothermal power. Other miners have flocked to America’s Pacific Northwest to take advantage of the region’s cheap hydroelectric power.
This trend is only going to continue. After all, bitcoin miners already use about 0.5% of the world’s electricity. Within a few years, they’re projected to consume 5% of the world’s electricity.
In other words, we’re talking about a 10-fold increase in energy demand.
Of course, I should be clear about something. I expect the crypto community to find other ways to reduce how much energy it consumes. But that won’t happen overnight.
So, expect more crypto miners to turn to renewable energies in the future. In fact, it wouldn’t be a surprise if the crypto market fueled the next explosive demand for renewable energy.
• Almost no one else is talking about it…
Instead, they’re focusing on the bad news (the massive energy demand of cryptos) while ignoring the massive investing opportunity in renewable energy.
Of course, this won’t stay a secret for much longer. Soon, other investors will connect the dots. When that happens, everyday investors will buy renewable energy stocks hand over fist.
You’ll want to get in front of that. So consider investing in renewable energy companies if you haven’t yet. You can easily do this by buying the iShares Global Clean Energy ETF (ICLN). This fund invests in a basket of renewable energy companies. It’s a safe way to bet on this trend without taking on any company-specific risks.
Buenos Aires, Argentina
May 21, 2018
Today, another fan of John Hunt’s recent essay: “Mr. Sociopath Goes to Washington”…
I found John Hunt’s essay on politicians as sociopaths to be one of the best I’ve ever read! It’s a key ideological component in illustrating the true nature of the members of the political process – a process that is so toxic to our very existence.
As always, if you have any questions or suggestions for the Dispatch, send them to us right here.
Doug Casey just found a crypto guru worthy of Casey Research subscribers…
This bright young German has been involved with digital currencies since he invested in e-gold in the late ’90s—long before the current blockchain breakthrough.
And like Doug, he’s a truly an “international man.” He made so much money from cryptos; he dropped everything and traveled the world for five years. And now, he has an important message…