Bitcoin Network Power Demand Drops Over 20% in 2022 as Renewable Energy Transition Accelerates
In response to China’s crackdown on cryptocurrency mining, Bitcoin (BTC) has turned to renewable energy sources, potentially one of the key factors behind triggering an over 20% drop in network power demand.
After reaching an all-time high in May 2021 and using up to 15.80 GW of power per day, the Bitcoin network’s global hash rate has dropped to 10.49 GW today, according to estimates calculated by Cambridge Bitcoin’s Power Consumption Index from 9 August 2022.
Already on a downward trend, electricity demand has fallen by 21% since the start of the year, falling from 13.28 GW on January 2, 2022 to 10.49 GW on August 8, 2022.
With the dramatic drop in Bitcoin price and its mining profitability falling, the power demand followed the same trend. Nevertheless, the increase in the use of green energy also played a large role in the decrease in demand.
US Government’s New Bitcoin Mining Policy
It is worth mentioning that in March this year, for the first time, the US government announced plans for a policy regarding Bitcoin mining facilities to tackle the sector’s power regulation problem and its impact on climate change.
In short, the White House’s involvement in Bitcoin mining aims to clean up the space amid concerns that the activity generates excess carbon emissions.
Meanwhile, in January, the Bitcoin Mining Council’s (BMS) report showed that nearly 60% of the electricity used to power Bitcoin miners can be attributed to sustainable sources.
In particular, this has revealed a trend that has persisted to this date, supported by BMS’s Q2 2022 report, which proves that green power and technological efficiency can work hand in hand to make sustainability profitable. According to the report:
“Based on this data, it is estimated that the global bitcoin mining industry’s sustainable electricity mix is now 59.5% or had increased by approximately 6% year-on-year, from Q2 2021 to Q2 2022, making it one of the most sustainable industries globally. <…> Additionally, year-over-year, the global Bitcoin network’s technological efficiency is estimated to have grown by 46%, from 14.4 EH per gigawatt (GW) in Q2 2021 to 21.1 EH per GW in Q2 2022. This efficiency gain confirms the fact that as the Bitcoin network continues to grow, it will become even more efficient over time.”
Finally, after the crypto market crash in May, which sent Bitcoin’s price down to an 18-month low, Bitcoin temporarily stopped being profitable for miners in June, which could have also affected the network’s power needs.
