Bitcoin Energy Consumption Drops After Price Crash

After nosediving in June, the price of Bitcoin has remained so low it forces the massive use of blockchain electricity to similarly dive. Over the past two weeks, Bitcoin’s energy consumption has fallen by more than a third, according to estimates of annualized electricity consumption by digital currency economist Alex de Vries on his website digiconomist. net.

Bitcoin’s thirst for energy, which has alarmed environmentalists and consumer advocates concerned about pollution and utility prices, stems from the process of mining new tokens. Bitcoin miners earn new tokens by validating transactions through an inherently energy-inefficient process, using specialized machinery to solve complex puzzles. All this computing by all these machines has led to an energy appetite rivaling that of entire nations.

Bitcoin’s annualized energy consumption has fallen from around 204 terawatt hours (TWh) per year on June 11 to around 132 TWh per year on June 23. But even though its electricity consumption has plunged, it remains very high roughly equivalent to the amount of electricity Argentina uses in a single year.

The amount of energy used by the Bitcoin network is related to its value. The more valuable it is, the more incentive there is for miners to speed up their operations, perhaps by buying new machines. Bitcoin price peaked in November 2021, reaching around $69,000. Since this peak, de Vries has estimated that the annual electricity consumption of the blockchain has varied between around 180 and 200 TWh. It’s about the same amount of electricity consumed by all data centers around the world every year.

Bitcoin’s value has been falling for months, but this did not lead to an immediate drop in power consumption as the price remained above a key threshold. If the price stays above $25,200, the Bitcoin network can sustain mining operations that consume around 180 TWh per year, according to research by Vries published last year. Since miners have already invested in their machines, they will likely keep them running as long as they can generate profit tokens.

The problem is that if the Bitcoin price gets too low, miners risk losing money in electricity costs. So they could pause or retire older, less efficient machines that become unprofitable, which is what we’re starting to see now. The value of one Bitcoin has remained below $24,000 since June 13. “We are getting to price points where it becomes more difficult [for miners]said de Vries The edge That day. “Where it’s not only limiting their options for growth, but it’s actually going to impact their day-to-day operations.”

And it’s not just Bitcoin. Ethereum uses the same energy-intensive process to maintain its ledger. Its price has also fallen this month, although it has rebounded somewhat over the past week. Ethereum’s estimated electricity consumption yesterday was almost half of what it was at the end of May.

There has been a big push to clean up cryptocurrencies. Some blockchains are much less energy intensive because, unlike Bitcoin (and Ethereum for now), they don’t use puzzle solving to validate transactions. Using renewable energy can eliminate emissions, but skeptics still worry about competition between crypto miners and nearby residents for electricity in this scenario. A Crypto Climate Accord has even been proposed to determine how to get rid of emissions. The problem they are all trying to solve will continue as long as certain blockchains like Bitcoin continue to consume large amounts of electricity.


Not all news on the site expresses the point of view of the site, but we transmit this news automatically and translate it through programmatic technology on the site and not from a human editor.
Back to top button