There's a lot of speculation behind the exact reasons for the recent cryptocurrency sell-off. Whether prices for digital currencies are in a bubble or not is up for debate. But whether you're a fan of Bitcoin (BTC 4.46%) or view it as a valueless mirage, there's no denying that mining it has a significant negative impact on the environment.

According to the Cambridge Centre for Alternative Finance, Bitcoin's estimated annual energy consumption is 116 terawatt-hours. That's as much electricity as countries like Argentina or The Netherlands consume in a year. 

Bitcoin's environmental impact has been a topic of conversation for years, but it's gained more attention as of late. One reason is that famous names have taken note of it. When Elon Musk announced that Tesla would no longer take Bitcoin as a form of payment due to environmental concerns, the price of the tokens slumped. Another issue is that the total energy consumption for Bitcoin mining tends to increase with its price as more operators bring computers online to compete to mine new supply.

Further increasing the energy cost was last year's "halvening," which halved the number of Bitcoins miners receive for solving each block of the complex computations that allow transactions to be added to the blockchain. Yet despite Bitcoin's recent 40%-plus plunge from its all-time high, the price of the cryptocurrency is still up around 27% for the year, which is a better performance than the nearly 12% gain S&P 500 has delivered. 

Whatever comes next in the cryptocurrency market, the environmental cost of Bitcoin mining isn't a topic that will go away anytime soon. And for investors looking to capitalize on those concerns, NextEra Energy (NEE 0.46%) and Western Digital (WDC -0.60%) are two stocks that could be big winners as crypto mining looks to go green.

A person uses a watering can to grow a plant. The plant is in the shape of a capital "B", insinuating the growth of the cryptocurrency, Bitcoin.

Image source: Getty Images.

NextEra Energy

It's no secret that roughly two-thirds of all Bitcoin mining takes place in China -- whereas just 5% to 10% of all Bitcoin is mined in the U.S. In China, access to cheap electricity from coal-fired power plants reduces costs for Bitcoin miners at the expense of higher emissions. One way to reduce Bitcoin emissions is to power more rigs with electricity generated from renewable energy. It sounds bizarre, but Bitcoin mining could be a profitable solution to renewables' energy storage problem. It's well known that renewable power generation is now cost-competitive with fossil fuels. But batteries remain too inefficient to store energy from wind or solar at scale. Instead of storing excess electricity, power companies could use it to mine Bitcoin. As U.S. renewable capacity increases, we could see a larger percentage of Bitcoin mined from cleaner forms of energy.

Whether the surge in renewable energy demand comes from crypto miners seeking alternatives to fossil fuels to power their massive computer complexes, or whether it's driven by President Biden's new infrastructure bill (or both), NextEra Energy is poised to thrive.

Like most utilities, NextEra is looking to integrate renewables into its mostly fossil-fuel-based portfolio. The difference is that while many of its competitors are still at relatively early stages with their investments into renewable energy sources, NextEra has already built and contracted several gigawatts (GW) of capacity. Its renewable division, NextEra Energy Resources (NEER), secured 92% of its capacity under long-term contracts in 2020. These contracts provide predictable revenue streams, which helps with forecasting and justifying other growth projects.

NextEra plans to add between 23 GW and 30 GW of renewable capacity between 2021 and 2024. On the high end, that would put NEER's total renewable capacity above 50 GW. For context, consider that the U.S. had 1,117 GW of utility-scale electricity production capacity in 2020, and that includes both renewable and nonrenewable sources.The company's anticipated contribution to the grid as a whole is noteworthy.

NextEra's high-octane growth spurt has come at a cost to its earnings and balance sheet, which have been weak over the past few years. However, the company is forecasting that its adjusted earnings per share will grow by between 6% and 8% annually starting in 2022. NextEra is also a Dividend Aristocrat with a yield of 2.1% based on the share price at the time of this writing.

Solar panels and wind turbines at dawn.

Image source: Getty Images.

Western Digital

My second pick is much more Motley than a utility stock like NextEra. Enter Western Digital, which has been making computer hard drives for decades. A pandemic-induced surge in the video game industry has directly helped the company's WD Black product line, which provides storage solutions for PC and console gaming. Just last week, it released three new solid-state drives (SSDs) for the WD Black portfolio specifically designed for newer consoles like the PlayStation 5 and Xbox One, as well as its latest PC offering. So, what does all of this have to do with crypto?

There's been a big buzz around environmentally friendly alternatives to Bitcoin. Most of those alternatives use what's called a "proof of space" model as opposed to Bitcoin's "proof of work" model. Bitcoin miners depend on high-performance graphics processing units like those made by NVIDIA to mine new supply and verify transactions on the blockchain. Proof of space tokens use storage as a means of verification. Put another way, Bitcoin relies on the output of computing power being used, whereas proof of space tokens rely on the memory provided by hard drives.

Chia is one of the hottest proof of space alternatives to Bitcoin. Even Amazon is opening its AWS platform to mine Chia. Chia mining still consumes a lot of energy, but the idea is that the model is far less taxing in terms of power consumption than Bitcoin because it was specifically set up to reduce emissions over time.

The young cryptocurrency has scheduled halving events that are similar to Bitcoin's. Bitcoin's halving events occur roughly once every four years. While Chia lacks a fixed supply limit like Bitcoin, its founders have devised a system that will gradually increase the supply at a low and predictable rate. 

A person holds an external hard drive while working on the computer.

Image source: Getty Images.

Established businesses with newfound upside

Utilities like NextEra Energy are among the more obvious picks for investors looking for ways to benefit from the future growth of clean energy, as well as the push toward sustainable cryptocurrency mining. And Western Digital is an established business that could benefit from the rising concerns about Bitcoin's high environmental cost. Chia is the front-runner among proof of space tokens, but others exist, and more could be developed. To Western Digital, it's all the same. Whether its demand comes from gamers or crypto miners, the tech company looks to be in a great position to benefit from a variety of tailwinds.