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Crypto bear phase drops Bitcoin’s energy consumption to one year low

Crypto bear phase drops Bitcoin’s energy consumption to one year low
Photo Credit: Pixabay
26 Jun, 2022
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The crypto market’s bear phase may have drowned some fortunes, but it may not be all bad for the industry. The overall energy consumption of the Bitcoin blockchain network, which has been a concern for many, has declined by as much as 35% amid the ongoing ‘crypto winter’, according to trackers who compile information on how much energy Bitcoin transactions consume.

Dutch economist Alex de Vries, noted on his blog Digiconomist, that the energy consumption of Bitcoin dropped from around 204.5 TWh (terawatt-hour) per year earlier this month, to a low of 130.5 TWh on June 19, the lowest it has been in the last year. The drop marked a decline of over 36% in the energy consumption of the blockchain network.

The energy consumption of Bitcoin is a key parameter, and shows the volume of Bitcoin tokens being mined by users around the world. Bitcoin miners use powerful hardware, such as specialized graphics processing units (GPUs), to power the network. These rigs execute programs that validate transactions on the blockchain, just like Visa and Mastercard do for card-based digital payments.

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In crypto, the process of mining that Bitcoin and many other crypto use, called ‘proof of work’, has been flagged as an energy intensive process that can hurt the Earth’s climate in the long run, since most of this energy comes from fossil fuels. For instance, data from Columbia University’s Climate School in May this year underlined that at an average of around 150 TWh annually, the Bitcoin network consumed more electricity than the entire nation of Argentina.

De Vries isn’t the only one to chronicle the drop either. Data from the University of Cambridge’s Bitcoin Electricity Consumption Index reflects this decline as well. In June 2022, the daily power demand of the Bitcoin network around the world declined from 14.93 GW (gigawatt) on June 11 to 10.57 GW this Saturday – a fall of about 30%.

Bitcoin’s energy consumption is closely linked to its price. In an interview, Sidharth Sogani, chief executive of crypto research firm Crebaco Global, told Mint that even with a revival expected in crypto prices in the next three months, Bitcoin is not expected to surge far beyond $25,000. As of writing, Bitcoin was trading close to $21,500.

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