Bitcoin Energy Consumption Declines as Miners Grapple With Falling Revenue

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Bit­coin min­ing is no longer con­sum­ing as much ener­gy as before, accord­ing to a Cam­bridge Bit­coin Elec­tric­i­ty Con­sump­tion Index report, which shows a 25% decline in ener­gy use since the start of the month.

Per the index, the cur­rent ener­gy con­sump­tion of Bit­coin is 10.65 gigawatts, sig­nif­i­cant­ly low­er than the 14.34-gigawatt on June 6. This means its annu­al­ized con­sump­tion is at 93.33 ter­awatt-hours, putting it below coun­tries like Argenti­na and Nor­way in ener­gy consumption.

At its peak, the BTC net­work need­ed 16.09 GW of pow­er. The drop in the con­sump­tion from its record high of 150 ter­awatt-hours in May is like­ly due to the drop in min­ing hash rate. 

Bit­coin hash rate is the com­put­ing pow­er need­ed to cre­ate a block on the Bit­coin net­work and has dropped to 199.225 exa­hash per sec­ond (EH/s) over the last two weeks. This came after the min­ing dif­fi­cul­ty reached a record high of 231.428 EH/s on June 13. It has now dropped by almost 14% since then.

The index esti­mates the ener­gy con­sump­tion by using a prof­itabil­i­ty thresh­old using “dif­fer­ent types of min­ing equip­ment as the start­ing point.” 

With Bit­coin prices nose­div­ing to below $20,000 this month, some min­ers have also gone offline as min­ing proved less prof­itable. This explains the con­sec­u­tive drop in the con­sump­tion and hash rate.

Miners are Selling Their Bitcoin Holdings

Addi­tion­al­ly, the drop in the price of Bit­coin has left sev­er­al min­ers in a lurch as they strug­gle to sus­tain their oper­a­tions. A recent report by Arcane research shows that pub­licly trad­ed Bit­coin min­ers sold all the coins they mined in May.

This is usu­al­ly against the strat­e­gy of most min­ers, which is to hold their Bit­coin for bet­ter mar­ket con­di­tions. But with prof­itabil­i­ty nose­div­ing and many min­ers strug­gling to gen­er­ate a pos­i­tive cash flow, they are sell­ing their holdings. 

Accord­ing to the report, many min­ers sold their Bit­coin to cov­er oper­a­tional expens­es and pay off debts. One of such is Bit­farms which decid­ed to sell 3000 Bit­coin for $63 mil­lion to improve cor­po­rate liquidity.

Ener­gy con­sump­tion of Bit­coin min­ing has been one of the major crit­i­cisms of the net­work and cryp­tocur­ren­cy indus­try. But recent research by Michel Khaz­za­ka reveals that the tra­di­tion­al bank­ing sec­tor uses 56% more energy.

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