Bitcoin’s energy consumption has reportedly declined drastically since only three weeks ago. Estimates from the Cambridge Bitcoin Electricity Consumption Index on Friday show that the network now consumes more than 25% less power than it did at the start of the month.
- According to the index, Bitcoin’s current electricity consumption is approximately 10.65 gigawatts. That’s down from the 14.34-gigawatt estimate recorded on June 6th.
- At these levels, Bitcoin estimated annualized power consumption now sits at 93.33 terawatt-hours – down substantially from May’s high of 150 terawatt-hours.
- The estimates are based on a “profitability threshold” that uses “different types of mining equipment as the starting point,” according to the index’s methodology page.
- This puts Bitcoin’s energy consumption back below Argentina (125 TW/h) and Norway, but still greater than that of Finland (82 TW/h)
- Bitcoin’s power consumption primarily stems from its proof of work consensus mechanism. The mechanism incentivizes Bitcoin “miners” to consume electricity in a race to construct Bitcoin’s next block. The winner earns a fixed number of Bitcoin.
- That said, when Bitcoin’s price falls, miners become less profitable. This disincentivizes less efficient miners from staying online, which can lead to reduced power consumption and hash rate.
- This month, Bitcoin’s price dropped below its previous all-time high in 2017. Its hash rate rapidly declined in short order, despite charting an all-time high just two weeks ago.
- A recent report from Arcane research found that public miners cumulatively sold off more Bitcoin than they generated in May. The selloff is expected to be higher in June.