Chinese bitcoin miners eye Canada's cheap power

A promotional flyer for the new Kodak bitcoin miner

A promotional flyer for the new Kodak bitcoin miner

The short-lived bitcoin mining industry is already on the cusp of being shut down by Chinese authorities following concerns at the heavy demand the sector is placing on the electricity grid.

Despite China being home to the world's largest community of bitcoin miners, they only use 0.2 percent of the country's annual electricity production, or 15.4 terawatt hours, according to the report.

That is equal to the total electricity consumption of Argentina and greater than Morgan Stanley's projected global electric vehicle demand in 2025 of 125 TWh.

Though the figure is too small to be a major driver of global utility shares, yet it represents an important growth story for firms investing in renewable sources such as wind and solar power combined with energy storage - a list that includes NextEra Energy Inc., Iberdrola SA and Enel SpA, according to Ashworth's note. "If we have to invest in our transmission network, these investments will be paid for by the miners", Pouliot said. That is more than a half of the electricity used annually by the world's biggest traditional miner, BHP Billiton, located in Australia.

And while migration may be a suitable long-term solution to the problem, it will likely be disruptive in the short-term and another potential headwind for cryptocurrency investors who recently saw bitcoin values tumble following the news that South Korea is considering a ban on bitcoin exchanges.

Matt Weinberger  Business Insider
Matt Weinberger Business Insider

Miners will probably concentrate in low-priced power regions, including China and the U.S. Midwest and Pacific Northwest.

Bitcoin mining draws upon industrial supplies of power to decode complex mathematical equations in order to validate new, and highly secure, transactions of bitcoin recorded via the blockchain leger.

The Morgan Stanley report did, however, offer some caution.

"There are plenty of uncertainties which means energy consumption could inflect in either direction", Ashworth wrote. "This is clearly not an exact science".

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