The price of Bitcoin continues its unexciting trend, and altcoin investors are contemplating the thought of having avoided cashing out. Short-term price movements are insignificant when we look back at the massive fluctuations since the last bull season. However, when we compare the end of 2022 with January 2023, there are two major contrasts. Investors who held on for about a year have made massive gains.
Cryptocurrency and Artificial Intelligence
Setting aside the price, we should also look at more intrinsic aspects of life. In 2021, we did this a lot with China’s mining bans. When China banned it using environmental damage as an excuse, US-based mining companies raced to set up operations powered by green energy. Before the year was out, Michael Saylor published a report stating that green energy accounted for over 50% of BTC mining.
International Energy Agency Report
The global electricity market is being forced to undergo fundamental changes due to the industry’s leadership in decarbonization and new consumption models. The International Energy Agency’s latest report also focuses on cryptocurrencies and artificial intelligence.
In the coming years, with the growth in these two areas, an increase in consumption is expected. According to the IEA’s 2024 report, which forecasts consumption until 2026, the global energy consumption increase dropped from 2.4% in 2022 to 2.2% in 2023 but is expected to rise to 3.4% by 2026. China and India are the two giants contributing the most to this growth.
By 2026, the IEA expects the energy consumption by artificial intelligence and crypto to double, surpassing 1,000 terawatt-hours (TWh). The consumption will increase the most in artificial intelligence, with just ChatGPT expected to consume nearly 10 TWh annually during this period. Each ChatGPT request consumes about ten times the energy of a Google search.
One terawatt-hour is equivalent to the annual energy consumption of 70,000 homes in the United States. From this perspective, we are talking about quite significant numbers. In 2023, Bitcoin consumed 120 TWh out of the total 130 TWh used in all cryptocurrency mining. This figure is higher than the 110 TWh level in 2022, which represented 0.4% of the world’s energy consumption, and is expected to reach 160 TWh by 2026.
The report stated the following:
“Energy savings may be offset by increases in other cryptocurrencies (transaction increases), even if some become more efficient (excluding Bitcoin), hence the challenges in reducing electricity consumption continue.”