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Because of the sharp drop in the value of bitcoin in June, the blockchain's share of electricity consumption has also declined. Energy consumption has fallen by more than a third in the past couple of weeks, according to estimates by digital currency economist Alex de Vries.
Annual U.S. blockchain power consumption fell from about 204 terawatt hours (TWh) per year on June 11 to about 132 TWh per year on June 23. But even though the country's power consumption has dropped, it's still very high - roughly equivalent to the amount of electricity Argentina uses in one year.
How much energy blockchain uses depends on the value of bitcoin. The higher its value, the more incentive miners have to ramp up operations. The price of bitcoin peaked in November 2021 ($69,000). After that peak, de Vries estimated that the blockchain's annual electricity consumption ranges from about 180 to 200 TWh. That's about the same amount of electricity that all of the world's data centers consume each year.
The value of bitcoin has been falling for months, but that did not immediately reduce power consumption as the cryptocurrency's price remained above a key threshold. According to a de Vries study published last year, if the value of bitcoin remains above the $25,200 level, then mining operations are not declining. Since miners have already invested in their machines, they are likely to keep them running as long as they can get tokens that generate revenue. The problem is that if the price of bitcoin gets too low, they risk losing money on electricity bills. Thus, they may suspend or retire older, less efficient machines that become unprofitable.
Bitcoin has remained below $24,000 since June 13. On June 18, its price fell below $20,000. De Vries noted that "we are approaching price levels at which it is becoming increasingly difficult to mine, which not only limits miners' ability to continue to grow, but will actually affect their day-to-day operations."
The process applies not only to bitcoin, but also to etherium. Its value has also plummeted this month, though it has recovered somewhat in the last week. Ethereum's estimated power consumption at the end of June was almost half what it was at the end of May.
Meanwhile, miners have already begun selling video cards en masse for about a third of the price. The cost of video cards this month has fallen by about three times relative to March-April.
Source: GuruITsource.com
