Bitcoin’s energy consumption has reportedly dropped drastically from just three weeks ago. Estimates from the Cambridge Bitcoin Electricity Consumption Index on Friday showed the network now consumes 25% less electricity than at the beginning of the month.
- According to the index, the current electricity consumption of bitcoin is around 10.65 GW. This is lower than the 14.34-GW estimate recorded on June 6.
- At these levels, bitcoin estimates that annual electricity consumption now sits at 93.33 terawatt-hours – significantly lower than May’s high of 150 terawatt-hours.
- The estimates are based on a “profitability threshold” which uses “a variety of mining equipment as a starting point,” according to the index’s methodology page.
- This puts the energy consumption of bitcoin below that of Argentina (125 TW/h) and Norway, but also higher than Finland (82 TW/h).
- Bitcoin’s power consumption mainly stems from its proof of work consensus mechanism. The mechanism incentivizes bitcoin “miners” to consume electricity in the race to build the next block of bitcoin. The winner earns a certain number of bitcoins.
- That said, when the price of bitcoin falls, miners become less profitable. This discourages less efficient miners from staying online, which can lead to lower power consumption and hashrate.
- This month, the price of bitcoin fell below its previous all-time high in 2017. Its hash rate declined sharply in short order, despite charting an all-time high just two weeks ago.
- A recent report by Arcane Research found that public miners sold more bitcoins than they generated in May. Selling is expected to be higher in June.
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