The massive amounts of electricity required to mine bitcoin could benefit these 5 stocks, Morgan Stanley says

  • Energy demand to mine cryptocurrencies “may represent a new business opportunity for renewable energy developers,” Morgan Stanley said.
  • Low-cost power regions, including the Southwest or Midwest US, and areas with the potential for wind and solar energy, stand to benefit the most from the rise in demand for energy.

Crypto mania could soon have an impact on the renewable energy business, according to Morgan Stanley.

In a note to clients, the US investment bank said that it costs between $US3,000 and $US7,000 to mine each bitcoin, making low-cost energy a key focus for bitcoin miners. That, in turn, may present an opportunity for renewable energy firms, according to Morgan Stanley.

Morgan Stanley said:

“In theory there could be pockets of outsized mining profitability given our projection that renewable energy, and storage, costs are likely to fall substantially. For example, if firm renewable energy could be generated at an all-in cost of 6 cents per kWh in the US, the cost of generating one Bitcoin would fall by $US600 relative to a power cost of 8 cents per kWh. In the Southwest US, NextEra Energy recently signed an agreement to provide a customer with a combination of solar power and energy storage at 4.5 cents/kWh. Recent wind power sales contracts in the Midwest US are in the range of 1.5-2.5 cents/kWh, and we project this will continue to drop as wind blade lengths continue to increase.”

Here are the companies Morgan Stanley highlighted as the key utilities that could benefit from increased electricity demand due to bitcoin mining, along with some of the bank’s comments on why they’re well-positioned:


American Electric Power

Ticker:AEP

Market Cap:$US34.4 billion

Comments: “The key utility beneficiaries we would highlight include: American Electric Power (AEP), Xcel Energy (XEL), and Entergy (ETR). These utilities serve the regions with the lowest cost of electricity, and AEP and XEL are taking advantage of low cost wind to drive rates even lower.”


Xcel Energy

Ticker:XEL

Market Cap:$US23.3 billion

Comments: “The key utility beneficiaries we would highlight include: American Electric Power (AEP), Xcel Energy (XEL), and Entergy (ETR). These utilities serve the regions with the lowest cost of electricity, and AEP and XEL are taking advantage of low cost wind to drive rates even lower.”


Entergy

Ticker:ETR

Market Cap:$US14.4 billion

Comments: “The key utility beneficiaries we would highlight include: American Electric Power (AEP), Xcel Energy (XEL), and Entergy (ETR). These utilities serve the regions with the lowest cost of electricity, and AEP and XEL are taking advantage of low cost wind to drive rates even lower.”


NextEra Energy

Ticker:NEE

Market Cap:$US72.15 billion

Comments: “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 powersolutions to concentrated mining operations.”


Pattern Energy

Ticker:PEGI

Market Cap:$US2.06 billion

Comments: “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 powersolutions to concentrated mining operations.”

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