In response to China’s cryptocurrency mining crackdown, Bitcoin (BTC) has turned to renewable energy sources, potentially one of the key factors behind triggering an over 20% drop in the network’s power demand.
After hitting an all-time high in May 2021 and using up to 15.80 GW of power per day, the Bitcoin network global hash rate has dropped to 10.49 GW today, according to estimations calculated by the Cambridge Bitcoin Electricity Consumption Index as of August 9, 2022.
Already on a downward trend, electricity demands have dropped by 21% since the start of the year, going down from 13.28 GW on January 2, 2022, to 10.49 GW on August 8, 2022.
With the dramatic drop in Bitcoin price and its mining profitability declining, electricity demands followed the same trend. Yet, the rise in the use of green energy also played a big part in the demand going down.
US government’s new Bitcoin mining policy
It’s worth mentioning that in March of this year, for the first time, the US government announced plans for a policy regarding Bitcoin mining facilities to tackle the sector’s power regulation problem and its impact on climate change.
In short, White House involvement in Bitcoin mining aims to conduct a clean-up of the space amid concerns the activity is generating excess carbon emissions.
Meanwhile, in January, Bitcoin Mining Council’s (BMS’s) report showed that almost 60% of the electricity used to power up Bitcoin mining machines could be attributed to sustainable sources.
Notably, this has revealed a trend that has persisted to this date, as backed by BMS’s Q2 2022 report, proving that green power and technological efficiency can work hand-in-hand to make sustainability profitable. As per the report:
“Based on this data it is estimated that the global bitcoin mining industry’s sustainable electricity mix is now 59.5% or had increased approximately 6% year-on-year, from Q2 2021 to Q2 2022, making it one of the most sustainable industries globally. <…> Additionally, year-on-year it is estimated that the global Bitcoin Network’s technological efficiency grew by 46%, from 14.4 EH per gigawatt (GW) in Q2 2021 to 21.1 EH per GW in Q2 2022. This efficiency gain reaffirms the fact that as the Bitcoin Network continues to grow, it will become even more efficient over time.”
Finally, after the crypto market crash in May, which caused Bitcoin’s price to go down to an 18-month low, Bitcoin temporarily stopped being profitable for miners in June, which also could have impacted the network’s power demand.