The collapse in the value of Bitcoin in recent months has had a considerable impact on the energy consumption of miners: it has fallen sharply in just a few months. Indeed, the profitability of mining being indexed on the price of Bitcoin, if the price of energy does not reimburse the cost of electricity and does not make the purchase of the equipment profitable, miners lose interest in it massively.
As you certainly know, the price of Bitcoin has fallen sharply in recent months. After peaking at over $60,000, it then fell below $26,000 and then below $19,000. It is worth, at the time of writing these lines, a little over 19,000 euros. Or a loss of two-thirds of its value. Imagine that you buy your 1 euro baguette on Monday. Tuesday, it would be worth 3 euros to compensate.
The devaluation of Bitcoin has had a direct consequence on the value of the portfolio of cryptocurrency holders, but not only. The entire Bitcoin ecosystem is affected. We are obviously thinking of minors. As a reminder, mining is a computer activity that is used to validate Bitcoin transactions and add them to the blockchain, a decentralized system independent of traditional banks. If a block is validated, the miners share a loot in the form of… Bitcoin.
Mining Bitcoin is no longer profitable with old hardware
Mining is done with computers called rigs. The latter are made up of graphics cards that constantly solve pieces of the blockchain. Since the mining is continuous (24/24 hours and 7/7 days), it is very restrictive for the computer components which heat up a lot and are renewed very regularly. Hence the shortages we experienced in 2020 and 2021 when the price of Bitcoin exploded. We relayed in the spring of 2022 that the shortage is less severe.
In addition, a rig consumes a lot of energy. According to The Guardian, mining a transaction takes as much energy asan American home for 50 days. Energy consumption has always been a sensitive subject for mining (especially in winter when some countries have been forced to cut off electricity locally to avoid importing it).
Bitcoin mining uses 36% less energy
When Bitcoin traded at $60,000, the gain more than offset hardware depreciation and energy costs. For the miners, the activity was profitable. But now that the cost of energy is increasing and the gain is divided by three, the equation is already more difficult to balance. And many miners give up this activity. Also according to the British daily, energy consumption has decreased by 36% between January 2022 and June 2022whereas it had been multiplied by 2.6 between January 2021 and January 2022.
Despite this drop, the energy consumption of Bitcoin miners remains very high. She is from 131 TWh per year. According to the Guardian, it is the equivalent of a country like Argentina. There is therefore a large proportion of miners who abandon the activity, in particular those who are equipped with old, less efficient rigs, or those who live in a region where the price of electricity has risen sharply, explain analysts interviewed by the daily.
Read also – Bitcoin, a waste of energy? This study proves otherwise.
Bitcoin is not the only one to see its energy consumption drop. For Etherium, the other big cryptocurrency, the drop is greater than 50%, reaching 46 TWh (i.e. the equivalent of Qatar). Should we see a deep trend here? Everything will obviously depend on the evolution of the price of Bitcoin and other cryptos. A question that leads to another: is the decline of Bitcoin good for the planet? In the short term, yes. But in the long term, again, we will have to wait to see the evolution of prices and the profitability of mining.
Source : The Guardian