Think if you don’t buy bitcoin, the whole cryptocurrency craze doesn’t affect you?
Beyond that, studies indicate it could be raising the price you pay for electricity.
One US government agency is trying to figure that out.
Here’s what it all means.
The University of Cambridge’s Bitcoin Electricity Consumption Index estimatedworldwide bitcoin mining used 121.13 terawatt-hours of electricity in 2023.
Why so much electricity?
Essentially,crypto tokens are generated by having a computer solve complicated puzzles.
That requires a lot of computing power, generally done by specialized computers running calculations 24 hours a day.
All those computers generate a lot of heat, which means these facilities usually have energy-intensive cooling systems.
Not all crypto tokens are quite as energy intensive as bitcoin.
Ethereum made a significant change in 2022 (called the Merge) thatsignificantly reduced its energy requirements.
Cambridge’s index now estimatesa year of energy demandat the current pace at nearly 165 terawatt-hours.
Such conditions can materialize and dissipate rapidly."
Why crypto’s energy consumption matters
All this power demand has ripple effects through the energy ecosystem.
Consider first where the US gets its electricity.
Another roughly 20% came from coal.
The grid also faces pressure from things likeelectric vehiclesandall-electric heating and cooling systems.
The serious electrical demand from crypto mining can also cause fluctuations in prices, as DeCarolis noted.
In other cases, it can lead tomore frequent blackoutsif the grid isn’t able to meet demand.
There are ways to insulate yourself from any changes in the energy market.
you might also considergetting solar panelsor ahome battery.
Solar panels allow you to be your own electricity source, independent of prices on the market.
Batteries can also provide you with power during blackouts if the grid goes down.
