Arcane Research Projects Bitcoin Energy Usage to Increase 10X by 2040

Bitcoin mining will consume a significant volume of energy by 2040 – more than ten times the current rate – if the asset's value skyrockets to a few million, according to a Monday report published by Arcane Research. The report was compiled by Jaran Mellerud, an analyst at the firm, who theorized that Bitcoin mining could account for a proportion of 0.36% of estimated global energy if the asset touches a $2M price mark.

Arcane Research paints the picture of Bitcoin energy usage in future

Mellerud pointed out that several factors will determine Bitcoin's future energy usage, including its future price, which hinges on market demand, transaction fees, and electricity rates charged to miners. For the bullish scenario of Bitcoin reaching $2M, Mellerud projects the Bitcoin energy consumption to increase more than ten-fold from the current consumption of 88 TWh, reaching 894 TWh per year by then.

This figure translates to a 0.36% share working with estimates of the global energy consumption. For the neutral case where BTC price touches $500,000 and the bearish case where the asset trades at $100,000, the analyst worked out the energy consumption of 223 TWh per year and 45 TWh per year, respectively. The analyst also outlined a scenario where Bitcoin's energy consumption declines as a sarcastic remark to Bitcoin scoffers.

“For those of you who want to see Bitcoin's energy consumption decline, you can relax in your armchair, because your wishes will be fulfilled if Bitcoin fails as a monetary system. And you believe Bitcoin will fail, don't you?”

The Arcane Research report comes as investors question other aspects of Bitcoin as an investment asset. Earlier this week, SkyBridge Capital CEO and founder Anthony Scaramucci asserted that even though Bitcoin remains highly attractive as an asset, it still has a long way to go before it can be considered a hedge against inflation.

Bitcoin must hit 1 billion wallets before it can hedge against inflation

In Monday's episode of CNBC's Squawk Box, Scaramucci explained that the leading digital asset is still at the stage of early adoption. The former banker stated that the asset still has a long way to go to reach 1 billion wallets, at which point he believes Bitcoin will then be able to act as a hedge against inflation. Bitcoin has a supply cap of 21 million coins. This fixed figure used to be regarded as the token's major characteristic to make it worthy of consideration as a hedge, just like Gold.

However, Bitcoin's increased correlation with traditional markets in recent years has changed this narrative. Even though Bitcoin currently lacks in “wallet bandwidth” currently, Scaramucci opined that it remains a highly lucrative asset and institutional demand reflects this performance potential. He also explained that with asset managers such as BlackRock launching Bitcoin products for its institutional investors, it is likely that this class of investors will influence the asset's price.

Differing views on inflation and Bitcoin’s position

Steven Lubka, managing director of private clients at Swan Bitcoin, recently told CoinTelegraph that Bitcoin remains an asset against inflation despite the recent troubles. Lubka nonetheless recognized that the flagship cryptocurrency hasn’t proven itself as a good hedge this year. In his opinion though, this performance is justifiable.

The Swam Bitcoin executive argued that inflation has so far been largely fueled by supply shocks and not factors related to monetary policy, an area where the Satoshi creation performs excellently and thrives as inflation hedge. Over the last week, Bitcoin has led altcoins in a performance downturn after the larger crypto space failed to capture the $1.2 trillion support in overall market capitalization. This metric's reversal saw it drop below $1 trillion late last week, but it has since clawed its way back above this figure.

To learn more, visit our Investing in Bitcoin guide.