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Recently, there has been an increase in energy usage by Bitcoin miners, which has made quite a noise in the cryptocurrency market. Last month, Bitcoin miners used an unprecedented amount of energy to circulate BTC before the halving event. This situation also led to a significant increase in equipment demand from Bitcoin miners.
Bitcoin Price Increases But So Does Energy Consumption
As the price of Bitcoin rose, miners’ energy consumption reached record levels. According to Coin Metrics data, miners used a record 19.6 gigawatts of power last month. This figure was 12.1 gigawatts in the same period of 2023, representing an increase of over 61% compared to the same period last year. This increase occurred simultaneously with the rising and surging Bitcoin prices. Particularly, a supply shock occurred among Bitcoin miners, resulting in this significant increase in energy consumption.
The increase in equipment demand is also noteworthy. Large mining operations have recently ordered billions of dollars worth of Bitcoin mining equipment. This surge in demand followed the continuous high demand since the introduction of Bitcoin ETFs. This persistent demand created a 20% imbalance between Bitcoin supply and demand.
Leading the group in Bitcoin equipment expenditures, CleanSpark Inc. and Riot Platforms Inc. are at the forefront with purchases of $473 million and $415 million, respectively.
The increase in equipment demand from Bitcoin miners stems from the high demand that has continued since the launch of Bitcoin ETFs. The constant purchasing also resulted in a supply shock that created an approximate 20% imbalance between Bitcoin demand and supply.
How Will Halving Affect Bitcoin Miners?
In the world of cryptocurrency, halving is an event that occurs every four years, cutting the amount of new coins circulated by half. Consequently, block rewards for miners are also halved. Generally, Bitcoin halving helps control supply and demand, potentially increasing the value of a Bitcoin due to its scarcity.
In general, Bitcoin halving creates a supply-demand relationship where Bitcoin mining becomes increasingly significant at a fixed rate. In such a scenario, post-halving hash power could see an increase, considering the continuous demand for BTC. Additionally, investors may be more inclined to pay exorbitant prices for a small portion of their asset allocation when Bitcoin becomes scarcer.
