Arcane Research has issued new estimates, which show that the most-valued crypto in the world, Bitcoin can become a significant consumer of energy in the future, but only if its value reaches millions of dollars.
Bitcoin’s energy usage
On Monday, a report was released by Arcane Research, which estimates the energy usage of Bitcoin towards 2040.
Jaran Mellerud, an analyst at Arcane Research, authored the report which highlights that the energy consumption of Bitcoin in the future will be massively different.
This is because it will depend on the future price of Bitcoin, along with other factors, such as electricity prices, transaction fees, and others.
The energy consumption of Bitcoin would be around 894 Terawatt-hours a year if its price reaches a value of $2 million in about 17 years. This would mark a surge of 10 times its consumption today.
Even though it would be a massive growth, this energy consumption would still be about 0.36% of the global energy consumption estimated in 2040.
The current share of Bitcoin in the global energy consumption is around 0.05%. Mellerud said that bitcoin miners consume 88 TWh of energy and the price of energy on average is $50 per MWh.
This means that energy ends up consuming about 50% of the income generated by bitcoin miners.
Less bullish scenarios
When it comes to less bullish scenarios, the energy consumption of bitcoin would be significantly lower. Bitcoin will consume 223 TWh a year if its price hits $500,000 by 2040.
If its price reaches $100,000, then the energy consumption would be around 45 TWh per year. The analyst at the crypto research and analytics firm also talked about Bitcoin halving’s impact.
This process sees the miner’s reward halved by 50%. The report said that the price has to rise at a fast pace because of the halving while rising transaction fees can offset its impact.
According to the analyst, this would only happen if there is a rise in demand for Bitcoin to be used as a payment method.
The demand for Bitcoin as a store of value determines the price of Bitcoin, while the usage of bitcoin for exchange determines its transaction fees.
Bitcoin as money
Two of the most important characteristics of money involve its use as a medium of exchange and as a store of value.
According to Arcane’s report, the energy consumption of Bitcoin will only reach a significant level if Bitcoin is used as money.
There are a lot of BTC skeptics who believe that this kind of scenario is not possible, so Mellerud said that they should not be worried about the energy consumption of Bitcoin.
He said that those who are worried about the massive amounts of energy consumed by bitcoin should relax because unless it becomes a monetary system, it will not be a problem.
2022 has already seen the bitcoin mining industry decline, as its value has dropped in an ongoing crypto winter in the market.