Bitcoin and Crypto Miners Experience Rising Costs During Summer Months
Bitcoin mining is increasingly becoming a less lucrative business. Since 2016 the mining profits have halved and the competition has increased many folds. competition among miners and an increasing hashrate have resulted in ever-higher energy consumption, with all the damage to the environment that implies.
Data shows that there have been very few dips during this overall rise of bitcoin energy consumption index. The strong increases continued during the first half of 2018 when the BTC price saw a significant correction from its December high of $19,900. For example, when the price fell by 46.2% over three months to the Feb. 17 price of $10,707, BTC's energy consumption increased by 42.6% over the same period — from 34.96TW/h to 49.85TW/h. And when BTC's value dropped by 9.87% between April and the end of June, its energy consumption rose by 20.9%.
Notwithstanding the recent turbulence, BTC's price was high enough to continue driving increased competition among Bitcoin miners, who added capacity to the network in a bid to claim freshly minted coins for themselves. This has had the overall effect of pushing energy consumption ever upward, undermining the sense that there’s any seasonal variation.
“We don't notice seasonal variations because the network has been growing quite fast, so any — presumably small — seasonal variation is lost in the large amounts of hashrate capacity — and thus energy consumption — being added every month. For example, a year ago, the hashrate was at seven exahash/sec and has grown to 45 exahash/sec today.”, says Marc Bevand agreeing to this narrative.
However, despite the overall opinion that there has been one continuous increase in consumption, some detailed variations are discernible in the data shown in the figure.
For one, if you calculate the growth in consumption between the 2017 summer months and compare it to the three previous months, you'll see a fall in the overall rate of increase. For Feb. 10 to May 10, consumption increased by 33.1 percent. But between June 1 and August 31 (meteorological summer), consumption increased by only 21.9 percent.
While in 2018, in the three months between June 1 and Aug. 31, BTC energy consumption increased by only 5%. Over the same period, BTC's value sank by 6.3%. The thing is its value dropped by a hefty 27% between March and May, during which time energy consumption actually increased by 31.6%. And between Dec. 1 and February 28, consumption increased by an impressive 69 percent, while the overall BTC value grew by only 7.8% between these three months.
As with the year before, 2018's movements underline two things: First, that the growth in energy consumption slows down to an appreciable degree in the summer months, and secondly, this slowdown can't be correlated with price movements, particularly with regard to 2017's figures.
This should provide a greater incentive for miners to mine Bitcoin and to increase their mining capacities, yet we nonetheless see that they eased up on their growth during the summer months.