IEA Raises Alarm: Crypto and AI to Drive Massive Surge in Electricity Use by 2026

2024-02-08, 16:08

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## TL; DR

Cryptocurrency and AI sectors’ demand for electricity is likely to double within the next two years.

There are over 8,000 data centres around the world that demand a lot of energy.

Cannabis farms and crypto mining are responsible for much electricity theft in the United Kingdom.

## Introduction

Many countries face shortage of electricity at the time the world is working hard to reduce the production of electricity using fossil fuel like coal. Apart from the move towards decarbonization, there are emerging patterns of electricity consumption in many countries. For instance, in countries where crypto mining is rampant there is often a deficit of electricity, especially during the winter seasons.

The aim of this blog is to assess the global electricity consumption patterns, with the focus on the crypto and AI sectors. We will also look at the extent of electricity theft in the United Kingdom.

## Cryptocurrency and Artificial Intelligence (AI) Consume 2% of Global Electricity

[The International Energy Agency (IEA) report](https://iea.blob.core.windows.net/assets/ddd078a8-422b-44a9-a668-52355f24133b/Electricity2024-Analysisandforecastto2026.pdf "The International Energy Agency (IEA) report") indicates that data centres, crypto and AI are consuming 2% of the global electricity supply. It also predicts that such consumption will double by 2026.

For the cryptocurrency sector, [crypto mining](https://www.gate.io/learn/course/crypto-mining "crypto mining") is responsible for much of the global electricity usage. This is because  cryptocurrency mining has led to the establishment of many data centres where crypto consumes electricity.

In a 170-page report it stated, “Electricity consumption from data centres, artificial intelligence (AI) and the cryptocurrency sector could double by 2026.”

Despite the current high crypto energy use, the growth of global electricity consumption decreased from 2.4% in 2022 to 2.2% in 2023. The following graph indicates the predicted AI and crypto mining sectors’ electricity consumption trend.

Electricity use by Data Centers, AI and Crypto through 2026 - [IAE](https://iea.blob.core.windows.net/assets/ddd078a8-422b-44a9-a668-52355f24133b/Electricity2024-Analysisandforecastto2026.pdf "IAE")

As you see in <a href="/price/the-graph-grt" target="_blank" class="blog_inner_link">The Graph</a>, the consumption of electricity in the sector is likely to increase in the next two years.

Read also: [How to use cloud mining to mine Bitcoin in just one click?](https://www.gate.io/blog_detail/250/gate.io-observation-how-to-use-cloud-mining-to-mine-bitcoin-in-just-one-click "How to use cloud mining to mine Bitcoin in just one click?")

Concerning this IEA said, “We estimate that data centres, cryptocurrencies, and artificial intelligence (AI) consumed about 460 terawatt-hours (TWh) of electricity worldwide in 2022, almost 2% of total global electricity demand.” Going by this prediction, it means that the two sectors may consume more than 1,000 TWh by 2026.

Read also: [What is BTC mining?](https://www.gate.io/learn/articles/what-is-btc-mining/287 "What is BTC mining?")

IEA has gone further to analyze the amount of electricity which traditional data centres and dedicated AI data centres may consume by 2026. The next graph presents the figures.

Breakdown of data center, AI and crypto use - [IEA](https://iea.blob.core.windows.net/assets/ddd078a8-422b-44a9-a668-52355f24133b/Electricity2024-Analysisandforecastto2026.pdf "IEA")

By comparison, you can tell that traditional data centres consume far less electricity than dedicated AI data centres. We have a specific example of ChatGPT which is expected to use about 10 TWh per year during the cited period.

Read also: [60+ Bitcoin Mining and Energy Consumption Statistics](https://www.gate.io/learn/articles/60-bitcoin-mining-and-energy-consumption-statistics-for-2023-you-need-to-know/1265 "60+ Bitcoin Mining and Energy Consumption Statistics")

We can best understand data center, AI and crypto energy use by appreciating household consumption of electricity. As an example, one terawatt-hour can power about 70,000 homes in the United States for a year.

In 2023 alone, <a href="/price/bitcoin-btc" target="_blank" class="blog_inner_link">Bitcoin</a> used over 120 TWh out of 130 TWh the [entire crypto mining industry](https://www.gate.io/blog_detail/359/understanding-cryptocurrency-mining "entire crypto mining industry") used during the period. Nonetheless, it is important to note that 55.4% of bitcoin energy provision comes from sustainable sources.

By the end of 2023 there were slightly over 8,000 data centers around the world. Over a third of them are located in the United States, 16% in Europe and about 10% in China. Most of these data centers have been established in big financial hubs like Frankfurt, Amsterdam, Paris, London and Dublin.

Related article: [Bitcoin ETF Trading vs BTC Miners and Traders](https://www.gate.io/blog_detail/3730/bitcoin-etf-trading-vs-btc-miners-and-traders "Bitcoin ETF Trading vs BTC Miners and Traders")

Generally, though, the IEA forecasts that electricity demand will increase by about 3.4% every year until 2026. It stated the reasons for such a development: “The gains will be driven by an improving economic outlook, which will contribute to faster electricity demand growth both in advanced and emerging economies.”

It added, “Particularly in advanced economies and China, electricity demand will be supported by the ongoing electrification of the residential and transport sectors, as well as a notable expansion of the data center sector.”

## Rising Crypto Sparks Controversy: UK Electricity Theft and Illicit Operations Uncovered

A [BBC publication](https://www.bbc.com/news/uk-england-66847243 "BBC publication") has pointed out that there has been an increase in electricity theft by individuals and organizations that power illicit activities. For instance, cannabis farms and unregistered crypto mines are responsible for some of these thefts. Analysts have also blamed the high incidences of power thefts to a rise in the cost of living in Wales and England.

BBC said that electricity theft in the United Kingdom has increased by 75% since 2012. Of course, much of the blame for the increase in the thefts is on crypto mining. Since mining cryptocurrencies like bitcoin is a lucrative venture some bad actors have identified loopholes that enable them to mine crypto using stolen electricity.

According to the publication, between 2021 and 2022 there were more than 3,500 electricity theft cases. It also explained what electricity theft means and implies. It stated, “Electricity thefts are where meters are tampered with or bypassed to avoid paying for energy.

Some of the [consequences of electricity theft](https://www.bbc.com/news/uk-england-66847243 "consequences of electricity theft") include leaving “live wires exposed … bypassing fuse boxes, increasing the risk of appliances overheating or catching fire and death.”

Notably, the [Blob Care report](https://iea.blob.core.windows.net/assets/ddd078a8-422b-44a9-a668-52355f24133b/Electricity2024-Analysisandforecastto2026.pdf "Blob Care report") has provided evidence of how crypto uses electricity in an illegal way. As an example, in May 2021 West Midlands Police discovered a bitcoin mining site at Sandwell industrial estate, with over 100 computers illegally connected to the grid. Thus, many governments are concerned about problems related to cryptocurrency and electricity theft.

## Conclusion

A report by The International Energy Agency (IEA) has shown that the demand for electricity use in data centers as well as the AI and crypto mining sectors has been rising since 2021. The consumption of electricity in these sectors is likely to double in the next two years. On the other hand, the increase in the cost of electricity has resulted in a surge in power thefts as some bad actors in the mining sector are searching for cheap energy sources.

Related article: [Bitcoin Mining: Paving the Way for Electrification Worldwide](https://www.gate.io/learn/articles/bitcoin-mining-a-path-to-electrifying-the-world/1367 "Bitcoin Mining: Paving the Way for Electrification Worldwide")

## FAQs about Crypto and AI Electricity Usage

### How much electricity does AI use?

Artificial intelligence and cryptocurrency use about 2% of the global electricity supply. In 2022 AI used around 400 TWh, with that amount likely to double within the next two years.

### How much electricity goes to crypto?

In 2023 the cryptocurrency sector used slightly over 130 TWh. Of this amount bitcoin consumed 120 TWh. The reason why bitcoin uses so much electricity is that crypto mining is power intensive.

### Is AI used in crypto?

AI performs many important roles in the cryptocurrency sector. It helps in risk management, trading automation and data aggregation which enables sound decision making.

### What is crypto mining?

Crypto mining is the process of producing new coins using computing power. Usually, the new coins are produced when specialized computer systems solve complex mathematical equations as a means to validate transactions on a blockchain. However, crypto mining works with a proof of work consensus mechanism.

<div class="blog-details-info">
<div>Author:** Mashell C.**, Gate.io Researcher
<div class="info-tips">\*This article represents only the views of the researcher and does not constitute any investment suggestions.
<div>\*Gate.io reserves all rights to this article. Reposting of the article will be permitted provided Gate.io is referenced. In all cases, legal action will be taken due to copyright infringement.
</div>

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