After the massive drop in Bitcoin prices in June, there was a similar drop in the massive electricity usage of the blockchain due to miners. Bitcoin’s energy consumption has dropped by more than a third over the past few weeks, according to annual electricity usage estimates on digital currency economist Alex de Vries’ own website, digiconomist.net.
Bitcoin’s energy starvation, which worries environmentalists and consumer advocates about pollution and usage prices, comes from the coin mining process. Bitcoin miners earn new coins by verifying transactions through an inherently non-energy efficient process, using special machines to solve complex puzzles. All this computation by all these machines leads to an energy use that rivals that of countries.
Bitcoin’s annual energy consumption has dropped from about 204 terawatt-hours (TWh) per year on June 11 to about 132 TWh per year on June 23. But while electricity use has fallen, it’s still quite high and roughly equivalent to the amount of electricity Argentina uses in a year.
How much energy the Bitcoin network uses depends on its value. The higher its value, the more reason miners have to speed up their work. Bitcoin’s price peaked in November 2021. de Vries has estimated that the annual electricity consumption of blockchain since peaking is roughly between 180 and 200 TWh. This equates to the amount all data centers in the world use each year.
In addition, prices do not only affect Bitcoin mining. Ethereum uses the same energy-hungry process to protect transactions. That’s why, although its price has rebounded a bit lately, Ethereum’s estimated electricity usage has dropped to almost half of what it was at the end of May, after the drop it experienced.
There is great pressure for cryptocurrencies to use clean energy. Unlike Bitcoin (and Ethereum for now), some blockchains consume much less energy because they don’t use puzzle solving to verify transactions. Using renewable energy can reduce carbon emissions. But even in this scenario, skeptics are concerned about crypto miners competing for electricity with those who live nearby.
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