Crypto Market Crash Cuts Bitcoin Energy Consumption by a Third

Crypto Market Crash Cuts Bitcoin Energy Consumption by a Third

Key Takeaways:

• This month's cryptocurrency crash caused the blockchain's massive electricity consumption to fall.


• The annualised energy consumption of Bitcoin has decreased from 204 TWh to 132 TWh.


• BTC and ETH have recovered from $17,588 and $880 to $21,449 and $1,229, respectively.

Cryptocurrency prices fell so precipitously this month that the blockchain's massive electricity consumption fell as well. According to annualised electricity use estimates published by Alex de Vries, a digital currency economist, Bitcoin's energy consumption has dropped by more than a third in the last few weeks.

Bitcoin's annualised energy consumption fell from approximately 204 terawatt-hours (TWh) on June 11 to approximately 132 TWh on June 23. Despite the significant decrease, current energy consumption remains exceptional. It is the same amount of energy that Argentina consumes each year.

Bitcoin miners generate new tokens by validating transactions using an energy-intensive process that involves solving complex puzzles. The greater the appreciation of BTC, the greater the incentive for miners to expand operations by purchasing new machines.

The blockchain's annual electricity consumption has ranged between 180 and 200 TWh since BTC peaked at $69,000 last year.

However, if the price of Bitcoin falls too low, miners will lose money on electricity costs. According to De Vries:

We're approaching price levels where it's becoming more difficult [for miners]. Where it is not simply limiting their opportunities to grow. Even so, it will have an impact on their day-to-day operations.

Ethereum (ETH) uses the same energy-intensive process as Bitcoin to secure its blockchain. The Ethereum community, on the other hand, will soon migrate to a proof-of-stake consensus mechanism, a more energy-efficient system for validating new transactions.

BTC and ETH have recovered significantly since the previous crash. They have recovered from $17,588 and $880 to $21,449 and $1,229 as of today.