Crypto Market Crash Cuts Bitcoin Energy Consumption by a Third
CoinEdition
Published Jun 25, 2022 05:35AM ET
Updated Jun 25, 2022 06:00AM ET
Crypto Market Crash Cuts Bitcoin Energy Consumption by a Third
- 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.
Continue reading on CoinQuora
Get The News You Want
Written By: CoinEdition
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.