As the world’s most-valued cryptocurrency, Bitcoin’s value is set to rise over the next decade. The question is – will Bitcoin become a major energy consumer as a result of this? Bitcoin’s energy consumption future depends heavily on its price increase, transaction fees, and mining trends.

The short answer is yes, Bitcoin has the potential to become a significant energy consumer by the year 2040 – but only if its price reaches several million dollars. This is an estimate based off of new research conducted by Arcane Research. Arcane Research is a crypto-dedicated research firm that provides data-driven analysis and research within the field of Bitcoin and other digital assets.

The crypto research and analytics firm have released a report estimating the development in Bitcoin’s energy usage toward 2040. Authored by Arcane Research analyst, Jaran Mellerud, the report explains that Bitcoin’s future energy consumption differs greatly depending on future Bitcoin prices in addition to external factors such as transaction fees, electricity prices and a few others.

Bitcoin’s Future Energy Consumption Explained

Theoretically, if the Bitcoin price reaches $2 million in two decades, Bitcoin could consume 894 Terawatt-hours (TWh) per year. This would be a 10-fold increase from its current level. Despite the growth, this would only account for 0.36% of global energy consumption in 2040. This is an increase from Bitcoin’s current 0.05% share, according to the analyst. Mellerud notes that Bitcoin miners currently spend around 50% of their income on energy, based on energy consumption of 88 TWh and an average energy price of $50 per MWh.

In less bullish market scenarios, Bitcoin’s future energy consumption would be significantly lower. For example, if Bitcoin’s price reaches $500,000 by 2040, it would consume 223 TWh per year. If Bitcoin trades at $100,000 in 17 years, mining would consume just 45 TWh per year.

Mellerud also highlights the impact of the Bitcoin halving, a quadrennial event that reduces miners’ block rewards by 50%. The Bitcoin price must rise tremendously as a result of the halving. However, this “mitigating effect” can be offset by increasing transaction fees in the future. Mellerud explains that this increase will only happen if there’s significant demand for Bitcoin as a payment system. According to the Bitcode Method developers, Bitcoin’s price depends on its demand as a store of value. Meanwhile, transaction fees depend on Bitcoin’s use as a medium of exchange.

Bitcoin Mining Faces Decline Amid Bear Market

The report suggests Bitcoin’s energy consumption will only reach significant levels if it succeeds as money in the coming years.

The Bitcoin mining industry suffered a major decline in 2022 amid the ongoing crypto bear market. Many crypto miners opted to sell their Bitcoin holdings rather than HODLing to stay operational. Mining companies in the United States also faced pressure from regulators, with lawmakers requesting energy consumption data from four major Bitcoin mining firms.

Despite the increasingly bearish crypto ecosystem, many Bitcoin miners are still optimistic about Bitcoin’s short and long-term price perspective. Only time will tell how much the value of Bitcoin will increase over the next decade.