The amount of electricity being used for mining cryptocurrency has shot down by roughly 50 percent as the crypto crash continues to take hold.
Electricity for Mining Has Taken a Serious Tumble
Since November of last year, when bitcoin reached its peak price of roughly $68,000 per unit, the world’s number one digital asset has fallen by close to 70 percent, and many believe we have finally entered the early stages of a “crypto winter” now that everything is down across the board.
Clearly, those engaged in mining agree as numbers have dipped alongside crypto prices. Right now, it appears only 131 terawatt-hours per year are being used to mine bitcoin, down roughly one third from its high on June 11, while Ethereum mining terawatt-hours have fallen from about 94 to 46 at the time of writing.
To be fair, one still equals the amount of energy used for the country of Argentina, while the other equates the amount utilized to power Qatar, so these numbers are still relatively high, but when one considers how much mining activity was occurring just 12 months ago, these figures look rather dismal by comparison.
Alex de Vries – a Dutch economist at Digiconomist, the company that has uncovered the mining data – explained in a recent interview:
This is literally putting them out of business, starting with the ones that operate with suboptimal equipment or under suboptimal circumstances (e.g., inefficient cooling). For bitcoin mining equipment, that’s a big issue because those machines cannot be repurposed to do something else. When they’re unprofitable, they’re useless machines. You can keep them around hoping the price will recover or sell them for scrap.
There are now several graphics cards available on the second-hand market. Many miners are rejecting their machines and turning away from the industry that once provided them with heavy rewards and riches. De Vries thinks that many of the mining rigs that were utilized in past projects will wind up being sold or tossed out. He said:
These machines are typically operating 24/7, and the components will get hot doing so. Heat [especially for prolonged periods of time] is known to wear out electronics, reducing longevity and reliability. Right now, it will mainly be older GPUs [graphics processing units] becoming unprofitable, meaning that it’s not unlikely these devices have been used for mining for a long time.
Is Celsius Responsible?
One of the big contributing factors to the crypto crash was the halting of withdrawals on Celsius, a crypto lending platform. This, in turn, wound up hurting a lot of other digital currency firms such as Three Arrows Capital (TAC), which experienced a solid liquidity crunch in subsequent weeks.
The many companies that had provided loans to TAC thus had to take emergency measures to get their funds back or stabilized.