The Anticipated Growth in Energy Consumption from Crypto, AI, and Traditional Data Centers
As per the International Energy Agency (IEA), the energy consumption from traditional data centers, artificial intelligence (AI), and cryptocurrencies is predicted to double by 2026. The IEA highlights the importance of data centers in today’s digital world, with computing tasks and device cooling accounting for 80% of their electricity demand.
In 2022, the industry’s energy demand for computing tasks totaled 460 TWh, equivalent to 2% of global energy consumption. However, this figure is expected to rise to 620-1,050 TWh by 2026, equivalent to the energy consumption of a country like Sweden or Germany.
Cryptocurrency’s Contribution to Energy Demand
Cryptocurrencies alone consumed 110 TWh in 2022, and this is projected to increase by over 40% to 160 TWh by 2026. However, the report acknowledges the uncertainties surrounding the pace of cryptocurrency adoption and technological efficiency improvements. It highlights Ethereum’s transition from proof-of-work (POW) to proof-of-stake (POS), which reduced its energy consumption by 99%. In contrast, Bitcoin accounted for more than 90% of the crypto sector’s energy consumption in 2023, reaching 120 TWh.
The IEA concludes that despite efforts to reduce electricity consumption, energy savings can be offset by increases in other energy-consuming operations, such as other cryptocurrencies.
Hot Take: Cryptocurrency and AI Driving Energy Demand
Global energy demand is set to surge due to the rising consumption from traditional data centers, artificial intelligence, and cryptocurrencies. The exponential growth in these sectors poses challenges in reducing electricity consumption, even as advancements like Ethereum’s shift to proof-of-stake provide energy-efficiency gains. The massive energy requirements of Bitcoin and the uncertainties surrounding the future adoption of cryptocurrencies will significantly impact global energy consumption. As the world increasingly relies on digitalization and emerging technologies, the need for sustainable energy solutions becomes even more urgent.
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