With the ongoing development in the tech industry, key players are projecting an increase in power usage in the artificial intelligence (AI) and crypto industries. A report from the International Energy Agency (IEA) demonstrated that the automation of crypto-mining activities and AI development will greatly affect the electricity market.
The IEA report argued the efforts to produce net zero products have greatly affected the energy consumption patterns.
IEA Forecast Increase in Energy Use in AI and Crypto Projects
However, the change in demand for AI and crypto has forced the firms to use renewable energy sources in the production process. The IEA forecast that due to the increasing demand for AI generative tools and crypto assets energy consumption will increase in the coming years.
The agency argued that for years the energy production sector predominantly relies on the burning of fossil fuels has been the main contributor to the emission of greenhouse gasses. This forced environmentalists to levy policies that compel companies in tech industry to decarbonize their operations.
The ongoing campaigns to reduce carbon emissions have gained fruition in the energy production sector due to the shift to renewable sources. The IEA projects that by next year the renewable source will become the main source of energy in most industries.
The agency argued that compared to traditional energy-generating sources renewable sources are more reliable and cost-effective. Besides analyzing the impressive transition to renewable sources the IEA report computed the power consumption year-over-year.
Review Global Electricity Consumption Report
In the report, the agency noted a significant drop in power consumption from 2.4% to 2.2% in 2023. Despite the drop in energy consumption the agency projects that the development in AI and the crypto industry will propel the power usage to 3.4% in 2026.
The agency anticipates that countries with well-resourced labour pools and friendly policies such as India and China will lead in energy consumption. Also, the IEA team observed that data centres powering AI and crypto projects are leading in energy use.
The report projects that the power consumption in AI and crypto data centre to reach 1,000 terawatt-hours (TWh) by 2026. This implies that the US will be among the top countries with the highest energy consumption since most of the data centres are based in the region.
Even though the crypto sector has witnessed an increase in activities the IEA team envision that power consumption in AI will overtake the digital industry by tenfold in 2026.
The agency noted a growing demand for AI generative tools in the coming years. In the latter the IEA forecast that OpenAI chatbot ChatGPT will consume 10 TWh per year.
Industry Leaders Project an Increase in AI and Crypto Activities
Compared to the energy consumed by Google, the report stated that ChatGPT’s energy consumption is ten times more. This implies that the AI project will consume the highest energy compared to other industries.
Based on the IEA analysis the 1TWh used in developing AI generative devices could power around 70,000 homes in the US.
A review of the 2023 power consumption in the crypto industry demonstrated that Bitcoin-related projects consume 120 TWh while other crypto mining activities consume 10TWh. This implies that the energy consumed in crypto activities in 2023 totalled 130TWh, a 0.4% increase from 2022.
The agency projects that the total energy to be consumed in crypto activities will reach 160 TWh in 2026. The report argued that compared to AI crypto uses a small portion of energy.
However, as the crypto industry awaits the upcoming Bitcoin halving miners have invested in acquiring new mining rigs. At the beginning of this year, high-profile Bitcoin miners including Phoenix acquired new Bitmain mining rigs in readiness for the Bitcoin halving event.
A recent research titled Bitcoin ESG Forecast demonstrated there will be an increase in the use of sustainable energy in Bitcoin mining. The report illustrated that miners will use approximately 54.5 % of sustainable energy to mine BTC.