FameEX Hot Topics | Energy Consumption of Cryptocurrencies Predicted to Rise Over 30% by 2026, Surpassed by Even Greater AI Usage Increase

The International Energy Agency (IEA), a leading multinational intergovernmental organization, anticipates significant changes in global energy consumption patterns due to the increasing demands of cryptocurrency mining and artificial intelligence (AI). The IEA's 2024 report, projecting energy use through 2026, acknowledges the challenges and transformations in the world's electricity market, particularly highlighting the crucial role of power generation in achieving net-zero emissions. Renewables are set to become dominant power sources by 2025.

Despite a slight decrease in consumption growth from 2.4% in 2022 to 2.2% in 2023, a rise to 3.4% is forecasted through 2026, with China and India being key drivers. Energy use by data centers, AI, and cryptocurrencies is expected to more than double during this period, surpassing 1,000 terawatt-hours (TWh), with a third of global data centers located in the U.S.

To contextualize, one TWh could power approximately 70,000 U.S. homes for a year. The combined energy consumption of crypto and related sectors is projected to equal that of Japan. Bitcoin's consumption alone stood at 120 TWh in 2023, from the total 130 TWh used in cryptocurrency mining, up from 110 TWh in 2022, which was 0.4% of the global energy consumption. Crypto mining's energy usage is expected to reach 160 TWh by 2026.

Despite the small proportion of the world's energy used for crypto mining, the IEA report raises concerns about its impact. The challenge lies in balancing energy savings against increases in other energy-intensive operations like cryptocurrencies, even as some become more efficient. Currently, Bitcoin mining reportedly utilizes 54.5% sustainable energy. As the Bitcoin halving approaches, mining activity intensifies, with many miners investing in new, perhaps more energy-efficient equipment. This investment trend could influence future energy consumption patterns.

In summary, the IEA's report sheds light on the evolving dynamics of global energy consumption, where the burgeoning fields of cryptocurrency and AI are becoming increasingly significant. The report underscores the need for a careful approach to managing these new technological advancements, balancing their benefits against the environmental implications of their energy use.

Disclaimer: The information provided in this section is for informational purposes only, doesn't represent any investment advice or FameEX's official view.