Arcane Research estimates that Bitcoin's energy consumption will increase 10-fold by 2040

What’s new? Arcane Research analyst Jaran Mellerud has put together several scenarios for the growth of Bitcoin's network energy consumption by 2040. According to him, the most significant variables in the calculations are the bitcoin price, transaction fees, the percentage of income that miners spend on electricity, and the average price of electricity for miners. Mellerud cited an optimistic scenario in which the BTC exchange rate rises to the $2 million mark by 2040. In that case, bitcoin could consume 894 TWh per year — 10 times more than it does now. This figure is equal to 0,36% of the estimated global energy consumption in 2040.

The report by Arcane Research

What other scenarios did Mellerud consider? The analyst modeled two more possible paths for bitcoin. In 2040, in a neutral scenario, bitcoin's price would rise to $500 000 and in a bearish scenario, it would rise to $100 000. In the former case, the asset would consume 223 TWh per year and in the latter, 45 TWh per year.

He calculated the energy consumption using the formula: Bitcoin's annual energy consumption = BTC price (reward per block + average transaction fee) * number of blocks per year * percentage of income that miners spend on energy / average price of energy in the mining industry.

Mellerud noted that the price of bitcoin is the most important factor determining future energy consumption. At the same time, the analyst added:

“Bitcoin's future energy consumption will only grow if it is valued as a means of saving and a payment system. The asset will only consume a significant amount of energy in 2040 if its price rises to several million dollars and transaction fees are high enough.”

As of August 24, 15:20 UTC, BTC is trading at $21 556, down 0,11% overnight, according to Binance.

Earlier, experts from mining equipment importer Intelion Data Systems reported that the amount of electricity consumption for mining in Russia increased almost 20 times in 5 years: from 64,05 MW in 2017 to 1245,34 MW in 2021.

According to the Bitcoin Mining Council's report for the second quarter of 2022, mining power consumption increased by 63% over the year. Cryptocurrency mining accounts for 0,086% of total carbon dioxide emissions and wastes 0,15% of the world's electricity.