FameEX Hot Topics | Projected Increase in Crypto Energy Use Over 30% by 2026, Exceeded by Larger Surge in AI Energy Demand

The International Energy Agency (IEA) has projected that the global electricity market will undergo significant changes in the coming years, primarily due to the increasing energy demands of cryptocurrency mining and artificial intelligence (AI). The IEA's 2024 report, which provides forecasts through 2026, emphasizes the ongoing transformation in power generation, with renewables expected to become the primary source of energy by 2025.

The report notes a slight decrease in consumption growth, from 2.4% in 2022 to 2.2% in 2023, but anticipates an increase to 3.4% by 2026. This growth will be largely driven by China and India. Energy consumption by data centers, AI, and cryptocurrencies is projected to more than double in this timeframe, exceeding 1,000 terawatt-hours (TWh). Notably, a third of all global data centers are located in the United States.

In terms of Bitcoin's energy consumption, the report reveals that it accounted for 120 TWh in 2023, a significant portion of the total 130 TWh used in all cryptocurrency mining activities. This was an increase from 110 TWh in 2022, representing 0.4% of the world's total energy consumption. The IEA predicts that by 2026, crypto mining will consume approximately 160 TWh.

Despite the relatively small share of global energy consumption attributed to crypto mining, the IEA's report highlights it as a concern. The challenge lies in mitigating the energy consumption of crypto mining operations, even as they become more efficient. Currently, Bitcoin mining is reported to use 54.5% sustainable energy sources. With the upcoming Bitcoin halving, there is an expected increase in mining activities, leading many miners to invest in new, potentially more energy-efficient equipment. These developments could significantly impact future energy consumption patterns in the cryptocurrency sector.

The IEA's report underscores the importance of carefully managing the rapid advancements in technology, particularly in the fields of cryptocurrency and AI. It stresses the need for a balanced approach that weighs the benefits of these technological advancements against their environmental impact, particularly in terms of energy consumption. This balance is crucial for ensuring sustainable growth and development in these rapidly evolving sectors.

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