Bitcoin Mining Is Getting Bigger (and Bigger)

There’s a lot happening in the cryptocurrency market. Honestly, there hasn’t really been a quiet day in quite some time.

At the moment, that’s the norm for the market. The hype and speculation are real.

Now more than ever people want to get in and be part of a market that is brand new and thriving.

The potential for life-changing profits has sparked interest with first-time investors. It’s an investment they feel like they can be a part of, along with the chance to earn some money and build their wealth.

My older brother has been toying with the idea of investing. He just never knew where to start. But recently, he finally found the interest he was looking for in cryptocurrencies.

He’s 31 and has a lot of interest in technology, especially computers. He’s a software engineer. So you can see why he’d be inclined to learn about Bitcoin and other cryptocurrencies.

And he’s not alone.

The increased popularity of Bitcoin and altcoins means an increased interest in its technology.

In fact, there’s a small town in Washington that’s becoming the epicenter of Bitcoin mining in the U.S.

Wenatchee, Washington, has become home to some of the largest Bitcoin and cryptocurrency miners in the country. What makes this small West Coast town so special? Why are cryptocurrency miners flocking to this area?

It’s because of one very important factor that’s crucial to miners: energy.

In Wenatchee, power is extremely cheap, costing around $0.02 to $0.03 per kilowatt-hour. Currently there are about a dozen Bitcoin and cryptocurrency miners in Wenatchee. They’ve set up shop and are churning out cryptos without going into too much debt themselves.

The head of the local power utility, Steve Wright, says there have been 75 other miners who have inquired about coming to Wenatchee, a result of the growing popularity of cryptocurrencies.

Wright said:

We’ve come from just a few people out there who have been knocking on the door all of a sudden to people who are banging on the door pretty loudly.

Mining the Cryptocurrency Market

Miners are scoping out ways to save money because mining cryptocurrencies requires a lot of power.

One of Wenatchee’s earlier miners, Malachi Salcido, produces around five to seven bitcoins per day. He has three mining operations in the town.

Despite the cheap energy in this town, it’s still pretty expensive to mine cryptocurrencies. Salcido has said that his monthly electric bills top $100,000. Even with the cheap power, it’s still an investment in itself to mine five to seven bitcoins.

As Bitcoin prices soared last year, so did energy consumption.

To put it in perspective, Bitcoin mining consumes more electricity than all the electric cars in the world. And we’re at the very beginning of this market, which means even more energy will be needed.

According to a report by Morgan Stanley, in 2018, Bitcoin’s power demand is projected to more than triple, consuming as much energy in a year as the entire nation of Argentina.

Mining Bitcoin Consumes A LOT of Energy

The bank estimates that Bitcoin mining could use up more than 125 terawatt-hours of electricity in this year alone. That’s the level electric vehicles are expected to hit by 2025… on a global scale.

Last year, 29 times more energy was required to produce bitcoins than to power all the Tesla cars driving today. As of 2017, Tesla reported that there are about 280,000 cars on the road.

Bitcoin mining produces more energy than 280,000 cars. That’s insane!

Morgan Stanley estimates that it costs roughly $3,000 to $7,000 to produce one Bitcoin. That’s including energy and hardware expenses.

With the price of Bitcoin today, miners are making profits from the bitcoins they are mining.

Cryptocurrencies use a lot of electricity. There doesn’t seem to be any correlation between electricity costs and cryptocurrency prices, indicating prices won’t be susceptible to energy price fluctuations.

If energy prices start to increase, then miners and mining companies will have to adjust. They’ll need to determine if they will be making a profit in the end.

This could spark some interest in energy companies that somehow use cryptocurrency to increase their own stock prices — for example, starting to accept Bitcoin payments.

Take a look at Kodak. Last week, it announced a Kodak cryptocurrency and blockchain technology. That day, its stock increased by 119%.

People can’t get enough of this market.

Mining Companies in China Are Moving to Canada

China is home to the world’s biggest Bitcoin miners. However, that might end soon. Right now, China is concerned with the excessive energy usage coming from Bitcoin mining operations. And because of those concerns, China has started to crack down not only on miners, but on the market as a whole.

As China is discouraging miners in its country, Canada has started to lure Bitcoin mining companies.

The CEO of San Francisco-based Apex Token Fund, Chris Keshian, told Business Insider:

We’ve seen a lot of movement towards Canada… The Canadian government is relatively friendly towards cryptocurrencies [and] energy is relatively cheap there.

Canada is seeing the benefits of this market. The country is grabbing the opportunity to reap taxes, increase local economies, and use excess power.

What seems like a problem for China could be a perfect opportunity for Canada.

Whether you’re a first-time investor or an entire country, it’s hard to ignore the opportunities that lie ahead in the cryptocurrency market.

Until next time,

Monica Savaglia

Monica Savaglia is Wealth Daily’s IPO specialist. With passion and knowledge, she wants to open up the world of IPOs and their long-term potential to everyday investors. She does this through her newsletter IPO Authority, a one-stop resource for everything IPO. She also contributes regularly to the Wealth Daily e-letter. To learn more about Monica, click here.