Bitcoin’s Jaw-Dropping Impact on Your Energy Portfolio

Matthew Carr By Matthew Carr, Emerging Trends Strategist, The Oxford Club

Market Trends

Editor’s Note: Over the weekend, bitcoin fell more than 29%. The SegWit2x upgrade was canceled, which was supposed to increase transaction speed. This sparked some panic.

Remarkably, bitcoin recovered from lows below $6,000 just as swiftly as it fell.

Time and again, we see bitcoin collapse. This is something bitcoin investors have to constantly be aware of. Many investors like to take advantage when the price dips low.

Keep this in mind as you read on about bitcoin’s prodigious energy consumption…

– Matthew Carr, Emerging Trends Strategist


Is this a bubble? Or just the beginning?

Questions like these are swirling around bitcoin.

The gains have been ridiculous…

On November 8, 2010, bitcoin was trading for $0.25.

A mere $100 investment would’ve bought you 400 bitcoins.

As of Friday, those 400 bitcoins would be worth $3,012,456.

In seven years, you could’ve turned $100 into $3 million. All you needed was faith and patience (or ignorance) to ride out the ups and downs.

Over the past couple of years at Energy & Resources Digest, I’ve pointed out when to take advantage of dips. I’ve also drawn your attention to catalysts that have proven to drive up bitcoin’s price.

In July 2016, I told investors to expect a surge as the four-year reward halving took place.

Since then, bitcoin is up 1,051.7%…

A $5,000 investment would be worth more than $57,000 as of Friday.

At the end of July 2017, I urged investors to take into account bitcoin’s “Independence Day.”

Over the following month, the price of bitcoin gained 81%.

And when the price of bitcoin dipped at the end of September and panic was in the air, I once again wrote that it was an opportunity to buy the dip.

If you’d acted then, you’d have nearly doubled your money by now…

Since the end of September, bitcoin has smashed through the $5,000, $6,000 and $7,000 levels.

All of the excitement has catapulted bitcoin into mainstream conversations.

This global phenomenon is sparking a new bitcoin record – one that goes beyond price.

As the bitcoin craze continues around the world, blockchain technology becomes increasingly more complex. Miners add new sets of transactions (or blocks) to bitcoin’s blockchain every 10 minutes.

Meanwhile, mining costs are soaring thanks to the resource miners need the most…

Energy.

The current estimated annual electricity consumption by bitcoin miners is 25.76 terawatt-hours.

And over the past month, as bitcoin’s price has blown through those threshold levels, miners’ energy consumption ramped up…

Now, if we break this down to the transaction level, we see how nutty this is.

There are roughly 300,000 bitcoin transactions per day. The amount of electricity used by bitcoin miners has increased to 253 kilowatt-hours per transaction.

That’s about as much as your home uses in a week.

That figure represents a 160.6% increase in electricity use since March, as the price of bitcoin has gone up 512%.

But here’s the most astounding figure: 0.13% of all electricity consumed in the world is currently being used to mine bitcoin.

Think about it… More than a tenth of 1% of all the electricity in the world is being used to compete in the blockchain. Another way to think about it is bitcoin miners now use more energy than the entire country of Oman.

Last year, Visa (NYSE: V) processed 82.3 billion transactions. The data centers that do this work consumed electricity equal to that of 50,000 U.S. households.

But that’s a drop in the bucket for bitcoin miners. Their electricity consumption is equal to that of 2.38 million U.S. households.

It may seem dire and pessimistic, but we’re on our way to seeing bitcoin miners consume as much electricity as Denmark by 2020.

As more investors flock to bitcoin, its price will continue to spike higher. The higher the price, the more miners flood into the system. In turn, as the rewarding halves every four years and there’s more competition, electricity demands from bitcoin miners will skyrocket.

It could spark an ongoing boon for utilities…

Good investing,

Matthew

P.S. My friends Adam Sharp and Andy Gordon from Early Investing LLC have done quite well for themselves and their subscribers by investing in bitcoin and other cryptocurrencies.

I’m told they have a huge recommendation coming very soon… but they won’t tell me any details…

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