Bitcoin mining and AI are scrambling for same energy

Bitcoin mining and AI have sparked a rivalry as they are competing for energy to power their data centers, reshaping the energy consumption patterns in the US.

This comes as electricity demand is on the increase as businesses are constantly upgrading their data centers in line with the increased demand for AI. Both sectors have drastically changed energy demand patterns in the US.

Bitcoin mining and AI scramble for energy

The International Energy Agency estimates that the combined energy consumption of Bitcoin mining and AI will surge to 1,050 TWh by 2026 and this quantity of energy is enough to power an entire country.

Bitcoin mining, according to estimates uses 120 TWh of energy on an annual basis. In 2023 alone, Bitcoin mining took 0.4% of global energy, which is reportedly a huge figure although AI is expected to outperform Bitcoin miners’ energy consumption demand by the year 2027, shifting about 20% of their power capacity to AI.

AI data centers are reportedly leading the energy consumption race and are projected to consume between 85 and 134 TWh of electricity by the year 2027.

This alone is equal to the total annual energy consumption of Norway and Sweden, clearly showing the amount of energy required to power complex AI models like OpenAI’s ChatGPT.

These models run on large farms of servers. Half a million servers, with an estimated consumption of 29.2 TWh annually, are required to run ChatGPT for every Google search.

Shifting the energy consumption patterns

Both Bitcoin mining and AI are scrambling for the same energy sources, as competition heats up. Tech firms like Amazon and Microsoft are reportedly after energy assets that previously had been controlled by crypto miners.

With the competition getting intense, some mining operators are making cash by leasing and selling power infrastructure. For others, the risk of losing access to the electricity that keeps them in the business becomes a reality.

With this competition, data centers are projected take up about 9% of all electricity consumed in the US, which is more than doubling their current consumption level.

Interestingly, crypto mining operations relies mostly on renewable energy sources and about 70% of its energy consumption is from green energy sources, while AI data centers rely mostly on fossil fuels.

With this in mind, tech firms are now forced to look into their carbon footprint and consider other energy sources such as nuclear power. For AI data centers, the challenge is not only on energy consumption alone, but their water consumption is also skyrocketing to cool off generative AI servers.