Bitcoin Set To Become Most Profitable Investment This Year

Should you sell your stocks and stockings, bonds and Bond 7, TV, vacuum cleaner, and music system to buy bitcoins and power a Bitcoin node miner? Calculations say YES if you want to make more money instead of spending more.

Bitcoin is an energy-guzzling beast, but so are TV sets, refrigerators, air conditioners, cars, planes, and private jets. But while this momentous currency is decried for daring to consume “too much energy”, some back-of-the-envelope calculations show that electricity companies worldwide, including their clients, would make more money prioritizing electricity for Bitcoin.

I daresay, Bitcoin might come for Sam Altman’s dreamy 7 trillion dollar funding. Both Bitcoin and ChatGPT consume a lot of energy, but AI’s racial biases may minimize its prospects. So if governments decide that financing AI is more trouble than it is worth, they may set up some good ol’ Bitcoin node miners themselves. Sign all-important transactions with other governments for cheap. Like oil deal transactions!

The Calculations

Annual Energy Consumption

Depending on your sources, Bitcoin’s energy consumption is headed for 200TWh soon. This is from the below statement by the US Energy Information Agency;

The CBECI estimates that global electricity usage associated with Bitcoin mining ranged from 67 TWh to 240 TWh in 2023, with a point estimate of 120 TWh - Source

Why the EIA doesn’t supply tighter figures is anybody’s guess (there is a margin of error as wide as 173TWh if we subtract 67 from 240). But let’s take their point estimate and presume, generously, that it will balloon to 200TWh before long. Especially now that its value proposition has attracted big investors like Blackrock and Fidelity, each with trillions of dollars in AUM.

We now need to convert 200TWh into KWh, which we price as electricity units sold by utility companies. We find that this year, Bitcoin might consume 200 billion KWh.

The Cost

Per Statista, Ireland paid the most for its electricity last year. Up to $0.52 per KWh. A global average is hard to come by though it is likely under $0.2 per KWh. So let us assume, at the upper end, that Bitcoiners were paying top dollar for their power. Say $0.6 per KWh to also capture electricity consumed by trading desks, Lightning Node operators, lighting, smartphone charging, etc.

Their electricity bill for this year is thus capped at $120 billion.

My oh my. Can they recoup from this investment?

The Net Income

This is the part where I speculate but based on the data.

First, the truth.

From the 1st of January to the 20th of April 2024, 6.25 BTC will be mined every 10 minutes. Thereafter, only 3.125 BTC will be mined every 10 minutes. Total bitcoins that will be mined this year thus = 144 10-minute-blocks x (6.25 x 110 days + 3.125 x 256 days) = 214,200. This is everything that Bitcoin miners will be fighting for.

The total circulating supply available to all humanity will remain more/less 19 million. Because people have lost some and people will lose some of the new coins. It happens.

Now we speculate.

We shall make 1 assumption:

1. Bitcoin’s value will return an annualized growth rate of +60% this year, as it has done for the last 10 years - Source

Though looking at another source, I feel like it has been much more.

Anyway, let’s take the current price, approximately 60,000, and assume it will help us average +60% this year by the close of the year on 31st December 2024. So Bitcoin’s price at that time will be $96,000.

How much money will it have made all its miners, hodlers, traders, speculators, and newbies? Taking the market cap which considers all 21,000,000 coins that can be mined, we have an increase in value / net income by the protocol of $36,000 x 21 milllion = $756 billion.

The Profit

Profit = Net income – Costs = $756 billion - $120 billion = $636 billion. This will likely make it the most profitable investment of the year. Hands down.

Conclusion

Last year, Oil company Saudi Aramco posted the highest revenue of any company in the world, with profits well over $247 billion – Statista.

I can’t stop thinking, what if Bitcoin was the global reserve currency used for oil trade by all countries in the world? How many trillions of dollars in profit would this energetic duo hit? It is hard to imagine.

Maybe $7 trillion per year.