Bitcoin Network’s Energy Consumption Slashed by 35% Due to Market Slump

The bear crypto market might not yet be at its worst, but it has already taken a toll on the industry from retail investors to Bitcoin mining firms. The latter has heavily impacted with a clear indicator being energy consumption. Though the leading cryptocurrency has seen a bit of a reprieve, up 16% over the last seven days to $21,395 at writing, its network power consumption indicates dropping usage.

BTC/USD YTD chart

Bear market is weighing heavily on energy consumption

On his Digiconomist site, digital currency economist Alex de Vries noted that the estimated Terawatt hours per year (TWh/year) in energy consumption for Bitcoin remained at 204.5 from the start of the year until June 11. Since then, there’s been a consistent descent, and as of June 24, the figure had reached 132.47 TWh/year.

While the drop shows how cold the crypto winter has been, this amount of energy currently consumed equates to that of Argentina. The equivalent carbon footprint of 73.89 Mt CO2, on the other hand, is comparable to that of Colombia.

Bitcoin miners typically operate on a profit-making business model, but the bearish market periods often constrain them to operate with only what’s enough to sustain day-to-day operations. However, according to de Vries, with the Bitcoin prices falling to unsustainably low levels, miners are finding it hard to keep their hungry machines running as long as they want.

Value in resale?

De Vries adds that miners who are kicked out by the poor market conditions may find it difficult to dispose of their equipment, even in the second-hand market. The Dutch economist explained that such is the case as Bitcoin miners cannot be reshaped for different use, adding that they aren’t any help when unprofitable and can only be sold for scrap.

Ethereum mining equipment is much more suited for resale as they have powerful graphics cards. With the breakdown of mining, these chips are flooding the secondary market. However, they also run a risk as they would have typically been kept running 24/7 before hitting the market a second time, de Vries explained.

Chinese state media forewarns that soon, Bitcoin will become worthless

The government of China has formed somewhat of an opinion on Bitcoin and the larger crypto market, except for its natively developed digital yuan, e-CNY.

It has often campaigned against crypto, and most recently, state media has been reporting that the leading digital asset, Bitcoin, will bubble down to zero in value. This week, the South China Morning Post said that the country’s Economic Daily new agency cautioned readers to beware of this imminent downfall and stay away from adoption.

The newspaper explained that Bitcoin is merely “a string of digital code” whose value comes from selling and buying the token. The viability of such a token thus relies on investor confidence. Should that confidence collapse or several countries denounce Bitcoin as illegal, the paper predicts that Bitcoin will fall back to “its original value, which is utterly worthless.”

Further, the Chinese state-run newspaper argued that the West is responsible for creating this high-leverage market (crypto), which it described as riddled with “manipulation and pseudo-technology concepts.” This contributes to the volatility that is characteristic of Bitcoin.

China has been aggressively establishing measures against Bitcoin and crypto. In 2018, it proscribed all non-local crypto exchanges from setting up operations in the country. Last year it outlawed crypto mining before an overall ban on crypto in September. That withstanding, adoption of the digital yuan continues to grow and has increased by 1,800% in the last year.

To learn more about Bitcoin visit our Investing in Bitcoin guide.