A new study predicts that crypto energy consumption will increase by over 30% by 2026, and AI energy consumption will see an even larger growth. The International Energy Agency (IEA) anticipates a surge in AI’s energy consumption, attributing crypto as a major consumer.
The electricity market is witnessing significant changes as the industry aims to reduce carbon emissions and encounters evolving patterns of energy consumption.
According to the IEA’s 2024 report, cryptocurrency mining and AI are poised for substantial changes in energy consumption in the upcoming years. Additionally, the IEA forecasts that data centers, AI, and crypto will more than double their energy consumption by 2026 and could surpass 1,000 TWh.
The IEA predicts that AI’s power consumption will grow tenfold by 2026, surpassing the energy use of data centers and crypto. Meanwhile, the IEA expects ChatGPT alone to consume nearly 10 TWh per year by 2026.
Each ChatGPT request, according to the IEA, consumes about 10 times more energy than a Google search.
In 2023, Bitcoin mining consumed about 120 TWh of energy, representing the majority of the 130 TWh used for all cryptocurrency mining.
Similarly, the IEA predicts that cryptocurrency mining will use up to 160 TWh of energy by 2026.
The IEA report highlights challenges in reducing electricity consumption, noting that energy savings can be offset by increases in other energy-consuming operations, such as other cryptocurrencies, even as some become more efficient.
However, the IEA report finds that Bitcoin mining is increasingly powered by sustainable energy, with a reported 54.5% of its energy coming from sources like solar, wind, and hydroelectricity.
Miners are investing in new equipment in anticipation of the upcoming Bitcoin halving. This move coincides with the general market sentiment this year, as all indication points to a bull run.
As such, new highs are expected for all cryptocurrency assets. The Bitcoin halving will reduce miners’ rewards. However, if Bitcoin’s market price doubles, it will act as a hedge against the reduced rewards.
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