As EV adoption races higher, is it time to charge into electricity investments?
Electricity is shaping up to be Wall Street’s next juicy investment space. The question facing financial advisors is how they intend to charge into it.
Crypto, AI and EVs have something in common other than being the three hottest investment areas over the past few years: They all require a ton of electricity, both to manufacture and maintain.
The Energy Information Administration estimates annual electricity use from cryptocurrency mining already represents from 0.6% to 2.3% of US consumption. The expectation on Wall Street is that this percentage will grow with increased cryptocurrency ownership, a trend that has been helped along by the spectacular price performance of bitcoin, as well as its recent availability via ETFs.
To exemplify this surge in power demand, the EIA points to the Lone Star State, where the Electric Reliability Council of Texas has 41 gigawatts of requests for new cryptocurrency mining capacity, for which only 9 GW of planning studies have been approved.
And it’s not just crypto creation that will be taxing America’s power grid going forward. AI and data center usage will also be stretching the capacity of the nation’s already-stretched power supply.
“Data centers took up about 2½ percent of the electricity in 2022, and they were projected to go up to as high as maybe 7 percent by 2030,” said Timothy Kramer CEO of CNIC Funds. “Well, in 2023 they were already 5 percent, so the forecasts are now saying that by 2030 you’re going to be somewhere between 10 to 30 percent of the entire electricity demand of the US is going to be for data centers.”
As for AI usage, Kramer says that right now a regular Google search takes about 0.3 watt hours of electricity, while an email takes around one watt hour and an
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