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- The Bitcoin community has reached its highest level of consumption
- Part of the decrease in consumption could be attributed to more environmentally friendly energy use
- According to the study, Bitcoin currently utilizes 67 terawatt-hours (TWh), down from 141 TWh in May
According to data from the Cambridge Bitcoin Electricity Usage Index, Bitcoin’s total estimated annual electricity consumption has dropped about 60%, from an all-time high of over 143 terawatt-hours (TWh) in May to as low as 62 TWh in early July (CBECI). Since early November 2020, this is the lowest energy usage rate ever recorded. Bitcoin’s annualized electricity usage is currently expected to be 67 TWh, down from 520 TWh in mid-May. The top limit consumption, or the absolute greatest total electricity expenditure based on the worst-case assumption, is 162 TWh. The Cambridge findings are similar to those of recent research published by the Bitcoin Mining Council. According to this study, the network consumes 180 TW each hour.
Furthermore, according to the poll, 56 percent of Bitcoin miners employ sustainable energy, according to CryptoNews. The Council was created in May 2021 with the backing of some of the top mining companies in the Bitcoin sector. It can be deduced that the energy consumed by the industry is becoming more efficient, despite the fact that it continues to deliver services and maintains a network that is free of interruptions.
How much energy does Bitcoin consume?
Electricity is the main requirement for crypto mining, reports show that electricity consumption rose 66 times during 2015. High growth in underlying mining and increasing crypto – prices are expected as increases in mining energy. Elon Musk, owner and CEO of Tesla is the world’s most popular cryptid advocate who has said it plans to end use of bitcoin as a payment form for all Tesla products. One of the reports estimated that 73% of Bitcoin’s consumption was carbon neutral due to significant reliance on hydropower in key mining hubs such as Southwest China and Scandinavia. However power consumption doesn’t have the same effect on carbon emissions.
Why does Bitcoin mining require so much power?
The cryptocurrency of miner bitcoins is mined to update the blockchain of Bitcoin transactions. The aforementioned activities require their ability to find numerical solutions to problem which have a hash which uses 64 bits of hexadecimal code. Miners are probably to have bitcoins when they come to a successful solution. Bitcoin miners are beginning to pop up around the world to scale up their hashrates. Increasing HC requires greater amounts of electricity and often can even overload local infrastructure such as the electricity grid. They provide the miners with the means to scale to the required size.
China and Iran have a role in the reduction in electricity use
Another factor that may have contributed to the decrease in Bitcoin electricity consumption is the recent incidents involving Chinese miners. According to CryptoNews, Chinese officials forced the closure of Bitcoin mining operations in five provinces: Sichuan, Inner Mongolia, Xinjiang, Qinghai, and Yunnan.
The Bitcoin network processing power was reduced as a result of this move, which was largely contributed by enterprises based in Asia. The hash rate for the month of May was 189 EH/s. According to Bitinfocharts, it is now at 91EH / s. Iran has lately taken steps comparable to those made by China. For the purported influence that cryptocurrency mining has had on the country’s electricity consumption, the government of that country has asked all legal cryptocurrency miners to halt mining. According to the authorities, this industry would be accountable for major blackouts across the country.
As previously noted, Bitcoin’s parabolic bull run that propelled its price past $64,000 in April resulted in a significant increase in the amount of electricity consumed by Bitcoin miners, sparking heated debates about the cryptocurrency’s potential environmental impact. After Tesla CEO Elon Musk banned Bitcoin payments for Tesla vehicle purchases on May 12, Bitcoin saw a huge sell-off.
A more detailed estimate of energy consumption
A more comprehensive information was provided by Garrick Hileman and Michel Rauchs in the 2017. That represents over half of the total Bitcoin Hashing Rate. Around half of what was spent was done by Chinese miners at lower-frequency mining capacity using 111 megawatts. Using this information it is possible to get a more precise idea of the carbon emission factor per kWh in grams of carbon dioxide equivalent per kWh (gCO2eq. It is currently used to determine the carbon footprint of the Cryptocurrency network as calculated by The Bitcoin Energy Consumption Index.
Locating the miners is crucial
The carbon footprint for the Bitcoin blockchain is a problem. Location of miner is crucial to knowing how dirty the power their work is. The average emission factor of China grid can be used as a rough approximation of the carbon intensities of the energy used for Bitcoin by. Assuming that 70% of Bitcoin mining is carried out by China and that 30% of the mining is completely clean it yields a weighted average carbon intensity of. This number can now be applied to power consumption estimates in the network to establish its carbon footprint.
Transfer of hash rates from China to the United States
According to an investigation by the firm Hashrate Index, given the departure of several mining companies from Chinese territory, everything appears to indicate that between 30 and 40 percent of the processing power or hash rate of Bitcoin will move from China to the United States in the remainder of this year.
Bitcoin’s estimated electricity use has been rapidly declining since the announcement, prompted further by China’s crackdown on the cryptocurrency mining business, in accordance with Bitcoin pricing. Following the closure of crypto mining operations in Inner Mongolia in April, Chinese authorities imposed a series of crypto mining bans across the country, including in hydropower-dependent provinces such as Sichuan and Yunnan, as well as Xinjiang and Qinghai.
With a background in journalism, Ritika Sharma has worked with many reputed media firms focusing on general news such as politics and crime. She joined The Coin Republic as a reporter for crypto, and found a great passion for cryptocurrency, Web3, NFTs and other digital assets. She spends a lot of time researching and delving deeper into these concepts around the clock, and is a strong advocate for women in STEM.
