Cryptocurrencies crashed so much this month that it forced the blockchain’s massive electricity use to dip.
BTC annualized energy consumption dropped from 204 TWh to 132 TWh.
BTC and ETH have bounced back from $17,588 and $880 respectively to $21,449 and $1,229.
The prices of cryptocurrencies crashed so much this month that it forced the blockchain’s massive electricity use to dip similarly. According to the estimates of annualized electricity use published by Alex de Vries, a digital currency economist, Bitcoin’s energy consumption has fallen by more than a third over the past couple of weeks.
Bitcoin’s annualized energy consumption dropped from about 204 terawatt-hours (TWh) per year on June 11 to roughly 132 TWh per year on June 23. Despite the significant drop, the current energy consumption remains extraordinary. It is the equivalent amount of energy a country like Argentina uses yearly.
BTC miners earn new tokens by validating transactions through an energy-intensive process of solving complex puzzles. As BTC appreciates, the more incentive there is for miners to boost operations by acquiring new machines.
Since BTC peaked at $69,000 last year, the blockchain’s annual electricity consumption ranged between 180 and 200 TWh.
However, if the price of BTC gets too low, then miners risk losing money in electricity costs. De Vries said:
We’re getting to price levels where it is becoming more challenging [for miners]. Where it’s not just limiting their options to grow further. Still, it’s going to be impacting their day-to-day operations.
Ethereum (ETH) uses the same energy-intensive process to secure its blockchain like Bitcoin. However, the Ethereum community will soon be migrating to a proof-of-stake consensus mechanism, a more energy-efficient system to validate new transactions.
Since the last crash, BTC and ETH have greatly recovered. They bounced back from $17,588. and $880 respectively to $21,449 and $1,229, as of today.