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According to recent Arcane Research predictions, Bitcoin might be a large energy user in 2040 if its price reaches several million dollars. According to new projections by Arcane Research, Bitcoin (BTC), the world’s most valuable cryptocurrency, has the potential to be a large energy consumer in the future, but only if it reaches several million dollars.
Arcane Research, a cryptocurrency research and analytics organization, issued a paper on Monday forecasting the evolution of Bitcoin’s energy demand until 2040. The paper, written by Arcane Research analyst Jaran Mellerud, asserts that Bitcoin’s potential energy usage varies greatly depending on the future Bitcoin price and other factors like transaction fees, power rates, and so on.
According to the analysis, if the BTC price reaches $2 million in 17 years, Bitcoin will require 894 Terawatt-hours (TWh) per year, increasing tenfold from its current level. Despite the massive increase, such energy use would only amount to 0.36% of expected worldwide energy consumption in 2040, up from Bitcoin’s current 0.05% proportion, according to the expert.
“Currently, Bitcoin miners spend roughly 50% of their revenue on energy based on their 88 TWh energy usage and an average energy price of $50 per MWh,” Mellerud added.
Bitcoin’s future energy use would be substantially lower in less positive scenarios. According to the analysis, if Bitcoin trades at $100,000 in 17 years, BTC mining would utilize just 45 TWh per year. Bitcoin’s price would have to hit $500,000 by 2040 for it to burn 223 TWh yearly.
The expert discussed the enormous significance of the Bitcoin halving. This quadrennial occurrence results in a 50% decrease in miners’ block reward. According to the research, the BTC price must be rising at a rapid speed due to the halving, while the “mitigating effect” of the halving can be compensated in the future by increased transaction fees. “Such an increase will occur only if there is a sufficient demand for adopting Bitcoin as a payment mechanism,” says the report. Mellerud continued:
“Bitcoin’s price is determined by market demand for Bitcoin as a store of value, whereas transaction fees are determined by Bitcoin’s use as a means of exchange.”
Despite the increasingly gloomy environment, many Bitcoin miners remain bullish on Bitcoin’s immediate and long-term price prospects. Long term, the mining sector is a “strong and prosperous enterprise,” according to Canaan senior vice president Edward Lu. The paper also says that because a store of value and a medium of exchange are two of the most fundamental functions of money, Bitcoin’s energy usage will only become significant if Bitcoin succeeds as money.
Featured Image: Megapixl @zoomteam
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