Bitcoin’s energy consumption has reportedly declined drastically since only three weeks ago. Estimates from the Cambridge Bitcoin Electricity Consumption Index on Friday show that the network now consumes more than 25% less power than it did at the start of the month.
According to the index, Bitcoin’s current electricity consumption is approximately 10.65 gigawatts. That’s down from the 14.34-gigawatt estimate recorded on June 6th.
At these levels, Bitcoin estimated annualized power consumption now sits at 93.33 terawatt-hours – down substantially from May’s high of 150 terawatt-hours.
The estimates are based on a “profitability threshold” that uses “different types of mining equipment as the starting point,” according to the index’s methodology page.
This puts Bitcoin’s energy consumption back below Argentina (125 TW/h) and Norway, but still greater than that of Finland (82 TW/h)
Bitcoin’s power consumption primarily stems from its proof of work consensus mechanism. The mechanism incentivizes Bitcoin “miners” to consume electricity in a race to construct Bitcoin’s next block. The winner earns a fixed number of Bitcoin.
That said, when Bitcoin’s price falls, miners become less profitable. This disincentivizes less efficient miners from staying online, which can lead to reduced power consumption and hash rate.
This month, Bitcoin’s price dropped below its previous all-time high in 2017. Its hash rate rapidly declined in short order, despite charting an all-time high just two weeks ago.
A recent report from Arcane research found that public miners cumulatively sold off more Bitcoin than they generated in May. The selloff is expected to be higher in June.