The International Energy Agency (IEA) has released its 2024 report, projecting significant shifts in energy usage patterns over the next few years. According to the report, the world’s electricity market is undergoing transformative changes, driven by the industry’s commitment to decarbonization and evolving consumption habits.
This transition towards cleaner energy sources is expected to make renewables the primary power generation method by 2025, marking a positive step towards reducing carbon dioxide (CO2) emissions.
Crypto and Artificial Intelligence: Key players
Two prominent sectors expected to undergo substantial changes in energy consumption are cryptocurrency mining and artificial intelligence (AI). While the growth of energy consumption slowed from 2.4% in 2022 to 2.2% in 2023, the IEA anticipates a resurgence, projecting a 3.4% increase through 2026.
This upswing is largely attributed to China and India, which are poised to become major contributors to this growth.
AI’s energy consumption surge
AI is projected to lead this energy consumption surge, with its power usage estimated to increase tenfold between 2023 and 2026. Surprisingly, even AI models like ChatGPT are expected to consume a significant amount of energy, with ChatGPT alone projected to require nearly 10 terawatt-hours (TWh) per year during this period.
To put this in perspective, one terawatt-hour can power 70,000 homes in the United States for a year. The energy consumed by AI and related technologies is set to exceed 1,000 TWh, marking a substantial increase over the next few years.
Crypto’s Growing Appetite for Energy
In the realm of cryptocurrency, Bitcoin stands out as a major energy consumer. In 2023, Bitcoin alone consumed 120 TWh of energy, out of a total of 130 TWh utilized in all cryptocurrency mining activities. This marked an increase from 110 TWh in 2022 when cryptocurrency mining accounted for 0.4% of the world’s total energy consumption.
The IEA predicts that cryptocurrency mining will surge to 160 TWh by 2026, highlighting its rapid growth.
Concerns over crypto’s energy consumption
Despite the nuanced picture of evolving energy consumption patterns, the IEA report singles out cryptocurrency as a cause for concern. The report notes that challenges persist in reducing electricity consumption, as energy savings achieved in one area may be offset by increased energy consumption in others, such as alternative cryptocurrencies that may become more efficient.
While Bitcoin mining has made strides in adopting sustainable energy sources, the overall cryptocurrency industry still has room for improvement in terms of energy efficiency.
Balancing act for the energy transition
The findings of the IEA’s report highlight the delicate balancing act the energy sector faces in its transition towards sustainability. On one hand, the industry is making significant strides in reducing carbon emissions, with renewables poised to dominate global power generation.
On the other hand, the rapid growth of AI and the persistent energy appetite of the cryptocurrency industry present new challenges. Efforts must be made to ensure that these sectors can operate efficiently while minimizing their environmental impact.
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