Cryptocurrency & Blockchain Business

Crypto and Cannabis

Unless you’ve been investing from under a rock, you know the two hottest investments of the past two years have been cryptocurrency and legal cannabis.

But have you considered what these markets have in common?

A few things, actually.

They’re both brand-new markets considered to be alternative investments. They’re both being driven by hype and speculation. And both seem to appeal to younger investors.

But these markets have something else in common that many investors overlook…

Mining for cryptocurrency and growing cannabis are both massive energy users.

You’ll see in a minute that both of these markets have already begun to play an important role in energy demand. And both have only really begun to proliferate.

Wanna Grow Your Own Weed? It’ll Cost You

Growing cannabis requires a lot of energy. Fortunately, for some cultivators, the ideal energy source is free: the sun. But not all growers are so lucky.

Outdoor cannabis production needs good sun exposure, warm nights, hot days, and low humidity. These growing conditions are only found in certain locations around the world. So many cultivators must operate indoor grow houses.

Growing weed indoors requires high-powered lights, ventilation, temperature control, and watering systems that often operate 24 hours a day. And each of these systems uses a lot of energy.

The lighting used is similar to the kind used in hospital operating rooms, which is 500 times greater than recommended reading light levels. Lighting for four plants uses as much electricity as 29 refrigerators.

Compared to typical household energy consumption, the electricity needed to grow weed inside is stunning. A 5,000-square-foot indoor facility requires over 40,000 kilowatt-hours per month. Meanwhile, the average household across the U.S. is about 900 kilowatt-hours. The energy used to produce one joint would also produce 18 pints of beer.

At the end of the day, it costs about $2,500 in energy to produce one kilogram of wacky tobaccy.

A 2012 report on indoor production found that cannabis cultivation makes up 1% of America’s electricity use. In states like California and Colorado, that number rises to 3% to 4%.

Cannabis requires a lot of energy, and the industry will need even more as it grows. But mining for cryptocurrency is even more energy intensive than growing weed.

The Crypto Equation: Energy + Time

Mining for cryptocurrencies requires loads of energy from both computer power and cooling systems.

Across the globe, Bitcoin mining alone uses over 73 terawatt-hours. That’s enough to power 6.7 million American households. It’s as much power as Austria uses on an annual basis.

And that’s just Bitcoin! There are over a thousand other cryptocurrencies still being mined.

Globally, estimates suggest cryptocurrency mining now uses 1% of the world energy.

Large-scale crypto miners know energy consumption is a problem. And they keep coming up with new solutions to make the process more energy efficient. But some say these efforts are in vain.

According to testimony by Princeton computer scientist Arvind Narayanan to the Senate Committee on Energy and Natural Resources, the only thing that really determines crypto prices is energy use. Narayanan told the committee:

If the price of a cryptocurrency goes up, more energy will be used in mining it; if it goes down, less energy will be used. Little else matters. In particular, the increasing energy efficiency of mining hardware has essentially no impact on energy consumption.

Both cryptocurrency and cannabis are the result of an equation. And a vital part of that equation is energy.

What will be the next big energy-sucking market?

Time will tell. But new markets like cryptocurrency and cannabis will help support future energy demand. For us as energy investors, that’s something to look forward to.

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