Bitcoin (CRYPTO: BTC) is a heavy consumer of energy, using about 0.55% of all electricity produced in the world today, according to the Cambridge Center for Alternative Finance. And most of the mining activity takes place in China, where coal is still the main source of fuel.
If Bitcoin is ever to clean up its environmental impact, it will need a lot of renewable energy to make it happen. This is why we believe that renewable energy stocks Atlantica sustainable infrastructure (NASDAQ: AY), Brookfield Renewable Energy Company (NYSE: BEPC), and First solar (NASDAQ: FSLR) could all help keep Bitcoin cleaner and make a good profit along the way.
Sustainability is its name
Howard Smith (Atlantic Sustainable Infrastructure): Anyone who mines Bitcoin, or knows of anyone who does, has an idea of the power of these servers. While Elon Musk recently raised concerns about the sustainability of the process at the forefront, this is just one part of the green energy discussion that has been going on for some time. Whether it’s mining Bitcoin or even making steel, companies are set to strike electricity deals to increase the use of renewable energy. This movement fits directly into the economic model of Atlantica Sustainable Infrastructure.
Crypto mining is global, and Atlantica’s business is spread across North America, South America, and the Europe, Middle East, and Africa (EMEA) region. The company has installed renewable energy generation capacity, natural gas efficient generation capacity, power transmission lines and water desalination plants. Any support for clean energy infrastructure, public or private, will be a potential growth opportunity for Atlantica.
Almost 75% of Atlantica’s revenue came from its renewable energy business in 2020. And 2021 is off to a strong start. The company made just over $ 300 million in equity investments in 2020, but by the first quarter of 2021 it had already agreed to $ 280 million in new investments, including the third largest geothermal power plant in the world. United States. After the end of the first quarter, it also announced an investment of around $ 200 million for a 49% stake in a 600 megawatt wind portfolio in the United States.
Investors, of course, are looking for green in more than just the use of energy companies. In 2020, Atlantica increased its cash available for distribution by 5.5%, which accelerated to 7.6% year-on-year in the first quarter of 2021. In the medium term, management believes it will increase distributable cash of 5% to 8%, giving investors good reason to expect past dividend growth to continue. The company’s dividend has increased by approximately 50% over the past five years. Computing power takes energy. Regardless of the reasons, a push for sustainable energy production plays directly into the business of Atlantica Sustainable.
Investing in a history of sectoral growth
Daniel Foelber (Brookfield Renewable Corporation): High electricity consumption is normal when it comes to Bitcoin mining. Indeed, one of Bitcoin’s greatest strengths, managing its supply, is also the main reason it becomes a strain on the environment.
A limited supply of 21 million tokens coupled with an average mining time of 10 minutes per Bitcoin block ensures that an increase or decrease in computing power does not affect the supply. Much of this consistency is due to the bi-weekly difficulty adjustments – part of the Bitcoin protocol – that make it easier or harder to mine Bitcoin. In other words, the same number of Bitcoin blocks will be mined every day regardless of whether 10 GPUs are working or 10 billion.
The reality is that Bitcoin’s electricity consumption could continue to rise as long as there are profits to be made from mining more tokens. However, there is reason to believe that crypto mining could actually help the transition from fossil fuels to renewables. Indeed, Bitcoin mining offers a solution to the battery storage problem. On particularly sunny or windy days, solar and wind farms can use this excess energy by powering Bitcoin mining platforms. It sounds crazy, but if that means making a profit from an otherwise wasted source of energy, then businesses are likely to do it.
Brookfield Renewable Corporation would be one of the safest ways to profit from the increased use of renewable energy. The company owns and operates renewable assets and power generation facilities, ending 2020 with renewable capacity of approximately 18.8 gigawatts.
Its unlikely Brookfield Renewable will be able to grow its revenue as quickly as the fastest growing names. But what it lacks in terms of growth it makes up for with its track record of above-market returns and increasing its dividend. Brookfield Renewable shares are returning 2.9% at the time of writing.
The solar leader
Travis Hoium (First Solar): As Howard and Daniel pointed out, Bitcoin requires a lot of energy, and just putting more renewable energy on the grid will help clean up the impact of this cryptocurrency. One of the largest and most profitable companies deploying new renewable energy assets is First Solar, the manufacturer of thin-film solar panels.
Unlike most solar companies, First Solar has been profitable for most of the past decade (minus about a two-year period of modernizing its factories) and has arguably the best track record in the industry. By the end of 2021, management expects to have a net cash balance of $ 1.8 billion to $ 1.9 billion, which is incredible for a company with a market capitalization of $ 8.5 billion. dollars.
Management also just announced a $ 680 million investment in Ohio, which will increase solar panel production capacity by 3.3 gigawatts (GW) per year. This will bring US capacity to over 6 GW and global capacity to over 11 GW.
As a vital component of solar farms, solar panels will continue to be in high demand as the demand for renewable energy increases and Bitcoin plays a role in this regard. And if you are considering investing in a solar power maker, you might as well bet on one of the few companies that have proven to be able to make money in the long run.
Cheaper renewable energies
The theme here is that all of these companies are expanding the supply of renewable energy in the market. And that’s what Bitcoin needs if it wants to clean up its operations. Bitcoin is one of the reasons why these stocks could have a long growth trail ahead.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Questioning an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.