JPMorgan Analyst Report: Bitcoin's Growing Demand Fuels Energy Needs, Natural Gas Emerges as a Viable Solution

ChainCatcher reports that JPMorgan analysts have released a report indicating that "as Bitcoin continues to become mainstream, electricity demand will increase." Bitcoin isn't the only cryptocurrency that requires a mining process, but it's the largest.

Bitcoin operates on the largest Proof-of-Work (PoW) protocol to date. From a fundamental standpoint, we believe that Bitcoin's demand and participation will increase rather than decrease over the next 10 years. Therefore, Bitcoin mining will become increasingly competitive, leading to higher demand for electricity as miners essentially work harder for rewards. Furthermore, the Bitcoin supply is fixed (21 million coins), further intensifying competition among miners as they approach the maximum mining opportunity (all Bitcoin is mined and in circulation). Finally, we believe that the normalization of asset allocation towards Bitcoin and widespread participation in US spot Bitcoin ETFs will drive most of the incremental demand in the short term.

Similar to our aforementioned viewpoint, we believe that natural gas is a reasonable power source for miners to meet this incremental energy consumption. Many miners are directly connected to the power grid, and natural gas can easily serve them. Similarly, given natural gas's advantages, including its relatively positive environmental impact, lower price, and higher reliability, we believe it is a reasonable power supply source for Bitcoin mining equipment (i.e., computers) that prioritizes uptime.

Take Texas as an example. It's one of the most popular states for large-scale Bitcoin mining in the US. According to Texas data, natural gas is the state's primary energy source, accounting for approximately 43% of all energy consumption in 2022. We believe this data complements our viewpoint that natural gas is a natural choice for Bitcoin miners' electricity supply.