Good day everyone,

I hope you are all well and had an excellent weekend, welcome to CryptoGod-1’s blog on all things crypto. In this post I will be looking at a report by the International Energy Agency (IEA), who believe there will be substantial increases in the amount of energy consumed by both cryptocurrency mining and artificial intelligence by the year 2026.

International Energy Agency

The International Energy Agency (IEA) has noted they believe there will be a substantial increases in energy consumption from crypto mining and artificial intelligence (AI) in the coming years. They are suggesting a projection of more than 30% increase in electrical consumption by there two industries by the year 2026. This was noted in the IEA’s Electricity 2024 report which outlined the expected growth in energy usage by 2026.

Within the report the IEA noted that power generation for the likes of crypto mining will remain a major contributor to carbon emissions, but at the same time it is also leading the transition to net-zero emissions. At the same time renewables are predicted to become the primary sources of power by 2025. Within the report it was noted that energy consumption by data centres, AI, and crypto mining could overtake the 1,000 terawatt-hours (TWh) mark, which would see it more than doubling in the specified timeframe. To put it into perspective, one TWh could power 70,000 homes in the United States for a year.

With profound changes taking place in the world electricity market, the industry leads the way in decarbonization and faces new consumption patterns, and the report noted:

“Power generation is currently the largest source of carbon dioxide (CO2) emissions in the world, but it is also the sector leading the transition to net zero emissions.”

The report also highlighted how the growth of consumption fell from 2.4% in 2022 to 2.2% in 2023 but is expected to rise to 3.4% through 2026. China and India are expected to be the major contributors to that growth. It is expected that the growth in use of power by crypto mining, AI, and data centres will see crypto and the related consumers reaching the level of power consumption that the nation of Japan currently has.

Bitcoin mining in 2023 consumed 120 TWh, up from 110 TWh in 2022. In total there was 130TWh of power used across the entire crypto mining sector. The IEA predicted crypto mining will use 160 TWh by 2026. In terms of AI, the sector is expected to see a tenfold increase in power consumption between 2023 and 2026, with large language models (LLMs) such as ChatGPT expected to consume nearly 10 TWh per annum. Every ChatGPT request consumes nearly 10 times the energy of a Google search.

Data centres are expected to see a huge increase in consumption, with an expection of them doubling their energy consumption by 2026. This will be in large part thanks to crypto and AI, according to the report. Currently one third of all data centres of all kinds are located in the United States, with approximately 8,000 data centres worldwide. Data centres are required for tasks such as storing email, photos, cat videos, and everything else floating around in the cloud. With Bitcoin mining and AI training requiring so much data consumption, more and more data centres are cropping up for these exact purposes.

Despite this complex scenario of energy consumption, the fact remains that crypto mining still only uses a very small portion of the world’s energy. The report noted:

“Challenges in reducing electricity consumption remain, as energy savings can be offset by increases in other energy consuming operations, such as other cryptocurrencies [than Bitcoin], even as some become more efficient.”

Bitcoin mining use roughly 54.5% sustainable energy, and while mining activity is increasing ahead of the Bitcoin halving, it is expected many miners will invest in new equipment to maximise their profits following the reduction in Bitcoin rewards from 6.25 down to 3.125 Bitcoin. The larger concern for many with be the greenhouse gas emissions tied to the electricity use in the data centres. Much, much more renewable energy will be required to offset the pollution from power grids and electricity demands from these data centres.

In 2022 about 2% of the global electricity demand was from data centres, crypto mining, and AI, which is about 460TWh of electricity. It is expected by 2026 the electricity consumption from data centres, including those used for cryptocurrencies and artificial intelligence, will rise to 1,050TWh. This of course depends on the pace of growth and development of these technologies, but that growth is equivalent to adding an extra country’s worth of electricity demand.

The United States sits in a precarious position, with the most Bitcoin mining located in the nation. The IEA believes a “rapid pace” of growth for data centre electricity consumption in the US over the next couple of years will see a rise from roughly 4 percent of US demand in 2022 to 6 percent by 2026. Others drivers in that growth are expanding 5G networks and cloud-based services.

A nation like Ireland, which has one of the lowest corporate tax rates in the European Union, is also expected to see a boom in new data centres over the coming years. Currently there are 82 data centres in Ireland, which accounts for about 17% of the nations electricity consumption in 2022. There are currently another 54 data centres either under construction or recently approved to start building within the nation, and it is expected that by 2026 all those data centres could be responsible for nearly a third of the country’s annual electricity demand. The IEA report notes:

“The rapid expansion of the data centre sector and the elevated electricity demand can pose challenges for the electricity system.”

The risk is not only for Ireland, as London is also facing a similar issue with data centre electrical demands. This has, in parts, helped to exacerbate the housing crisis experienced by these nations. Ireland currently has nearly 13,000 homeless people from its population of about 5 million, and that figure is consistently rising. With places like Texas in the U.S., a Bitcoin mining hub, grappling with new crypto mines it has seen increased pressure added to their already aging and stressed out power grid. 

Considering data centres are basically warehouses for computers, about 40% of their electricity demand comes from computing. Another 40% is required to keep the equipment cool, while IT equipment makes up the remaining 20%.

Have a great day.

Peace. CryptoGod-1.

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