The power consumption of Bitcoin and Ethereum has plummeted three weeks ago. Estimates from the Cambridge Bitcoin Electricity Consumption Index on Friday show that the network is currently consuming 25% less than at the start of the month, at around 10.65 gigawatts. This is down from the 14.34 gigawatt estimate recorded on June 6.
Currently, Bitcoin’s annual power consumption estimate stands at 93.33 terawatt-hours, a sharp drop from May’s peak of 150 terawatt-hours, well below Argentina (125 TW/hr) and Norway, but still larger than Finland (82 TW/hr).
Meanwhile, the Ethereum network’s electricity consumption dropped markedly, from a peak of May 23, 93.98 TW/h per year, to 47.73 TW/h per year, down 49% in 32 days.
The power consumption of Bitcoin and Ethereum is mainly derived from their proof-of-work consensus mechanism. This mechanism incentivizes “miners” to consume power in the race to build the next block. The winner earns a fixed amount of Bitcoin or Ethereum.
With this mechanism, when the price falls, miners become less profitable, causing many miners to “shut down”, resulting in reduced power consumption and hashrate. This month, Bitcoin’s price fell below its previous ATH in 2017. Its hashrate rapidly declined in the short term, despite hitting ATH two weeks ago.
A recent report from Arcane Research shows that public miners sold more Bitcoins than they generated in May. Sales are expected to be even higher in June.
Falling prices put pressure on inefficient miners, forcing them to shut down or face loss-making activity. Bitcoin mining profits dropped to $0.0715/day at 1 THash/s on June 19, marking a 20-month low.
Similarly, Ethereum mining profitability is also trending downward, to $0.0135/day for 1 MHash/day on June 18, a 26-month low. If the price continues to trend down, only the most efficient miners can afford to stay afloat.
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