Bitcoin mining efficiency increased 17% in a year full of obstacles

graph shows record of electricity consumption of bitcoin mining

Key facts:
  • The current electrical consumption of the Bitcoin network is estimated at 10,157 MW.

  • The hashrate of Bitcoin has increased, despite the fact that less electricity is consumed.

Those who mine Bitcoin are aware of the improvements in the efficiency of mining equipment in the last two years. However, this is not very evident to other people who do not live day to day with the problems related to the electricity consumption of Bitcoin. According to estimates, this efficiency in electricity consumption is 17% better than a year ago.

According to a Hashrate Index metric, Bitcoin electricity consumption is 10,157 MW today. A year ago, a similar figure had been the highest reached before China’s Bitcoin mining ban prompted the migration of macro-mining farms.

Thus, little by little, Bitcoin reached the levels of hashrate, or total computing power, that it had in 2021. In fact, it surpassed it, setting a record of 230 EH/s in May of this year, despite the low profitability that the activity traverses.

As a result of this transition period, Bitcoin undergoes a transformation in terms of the geographical distribution of miners and their strategies to optimize profits in different regions of the globe.

This situation led to a resurgence of the debate on the electricity consumption of Bitcoin mining, since most of the farms were installed in the United States, a country noted for decades for its environmental policies and pollution levels.

Bitcoin uses less electricity for a higher level of security

If we consider an average Bitcoin electricity consumption of 10,100 MW, and the different global hahsrate rates between the end of May 2021 and the beginning of June 2022, we observe a total hashrate growth of 35 EH/s, in round numbers. That represents that 17% difference in terms of efficiency that we talked about.

graph shows record of electricity consumption of bitcoin mining
The estimated electricity consumption of Bitcoin has seen ups and downs, most recently after the mining ban in China. Source: Hassrate

However, it is possible to break down these figures if you consider the method used by the Hashrate Index to estimate its electricity consumption measurement. Under the assumption that the network is wide and includes the use of a huge number of devices that each have different types of performance in terms of power consumption and hashrate provided.

On the one hand, they estimate an upper limit of power consumption based on the hashrate and efficiency of an Antminer S9. This model, which has been on the market for several years, is a standard. However, it consumes more electricity than newer models.

On the other hand, the same estimate is made with more efficient equipment (not specified). As a result, an estimate of a lower power consumption limit is obtained.

The truth is a year ago we could still see a significant presence of low-end equipment such as the S9 operatingsince the profitability allowed them to keep contributing hashrate to the network in exchange for the reward in BTC.

Now we could see a change in the dynamics of the miners, with the arrival of new, more efficient equipment and a persistent bear market.

graph shows bitcoin hasrate increase in the last year
Within a year, the Bitcoin hashrate increased from 175 EH/s to 210 EH/s. Source: Brains

Analysts forecast a trend towards an increase in hashrate, which could be between 25% and 50% higher to the current Although many could turn off their less profitable and higher consumption equipment, there would be a balance in the total electrical consumption of the network.

The efficiency of Bitcoin ASIC miners is increased

The efficiency of ASIC equipment to mine Bitcoin is proportional to the income from the reward that Bitcoin grants. According to this premise, the trend of miners should be to upgrade their mining hardware, the extent possible.

This implies big changes in strategy. As we have reported in CriptoNoticias, the newest equipment has already begun to be distributed among the large farms, who have been the first to be awarded these purchases.

The least profitable teams, older models like the Antminer S9 still have a market. But its use greatly depends on the price of electricity. For this reason, it is likely that second-hand markets in countries like Venezuela, where electricity is very cheap, will continue to be flooded with an offer of these ASICs to mine.

All in all, the Bitcoin scenario is like a chessboard, where governments and miners debate, in different jurisdictions, environmental policies and future legislation to stop or boost the local growth of Bitcoin mining.

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