The Battle for Energy Between AI and Bitcoin Miners

Technology companies and Bitcoin miners require huge sums of energy to do their jobs. Energy assets used by miners to supply their needs are now being acquired by tech companies. In this article, we discuss the Energy demands of AI and Bitcoin mining.  

Powering the digital sphere is a battle, and the first war may have just begun. 9% of the entire energy output of the US could be taken up by data centres according to some estimations. Tech companies have now begun to grab energy assets, who want to use it for artificial intelligence. This has left Bitcoin data miners scrambling for energy, or in some cases changing their business model to supply these companies with the power they need. The following article explores the outcomes of this grasp for energy. 

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The Fight for US Energy

In the United States, a race is taking place that is unseen by many citizens. This is the race for energy and the fastest growth in demand for power since the millenium began is currently taking place. By the end of the decade data centres needed to run artificial intelligence and cloud computing services are expected to have doubled their energy consumption. The result has been a battle for energy, spearheaded by the major tech giants. 
 
Those who mine Bitcoin are starting to feel the impact. Yet consistent outcomes have not been a result of this. Huge amounts of energy are required by the sector to function. Many who have been in business for some time with the infrastructure already in place, have begun leasing or selling their sites to tech companies. However, others have found electricity become scarce, making it almost impossible for them to continue their mining operations.  

Around 20% of mining infrastructure and power will move to the AI sector as soon as the end of 2027 according to some estimates. A swing toward miners selling their assets to technology companies has already begun and is expected to increase. These crypto miners who have huge amounts of land and power are being approached by big companies, and many are shifting strategies by marketing property and energy.  
 
This has also gone the other way, with some miners now trying to seize back energy from companies. Marathon Digital Holdings, a publicly owned Bitcoin miner, has even been looking at buying nuclear-powered data centres for its mining activities. 

How Will Energy Shortages Impact Bitcoin Prices

Bitcoin is the most well known cryptocurrency, and thus the most desirable. It is now a major player in the financial world, and many view it as one of the most stable of cryptocurrencies.

However, Bitcoin remains volatile compared to other investments at the best of times, but this energy battle could see it become even more so. A reduction in Bitcoin mining means fewer coins, so it is sure to push up the price of Bitcoin. If this is sporadic with energy-returning intermittently, we could see months of increased production combined with months when it drops back down.  

For tech companies, a lack of energy will be disastrous, pushing up their operating costs and this will undoubtedly be passed onto consumers. Many of them may also be reluctant to use energy infrastructure leasing from Bitcoin miners as a long-term solution due to the lack of security. This would mean miners could name their price, inflating costs as they see fit.
 
Of course, the knock-on effect is that energy prices will rise. If the tech sector starts to use the consumption predicted, the laws of economics state that demand with a lack of supply will result in price increases. This will result in the average person on the street facing higher bills, at a time when energy poverty is becoming a very real global threat.

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Solutions to the Bitcoin Energy Crisis

There is one possible solution for this, and that is for the tech sector to take responsibility for the energy it uses. This may be more of a necessity than a choice. If the industry starts to invest in sustainable energy sources such as wind, hydro and solar then it could create the energy it uses, or at least manage to account for the deficit in the short term.  

Many savvy investors have already started to notice this necessity. The list of green and sustainable energy startups attracting huge amounts of investment is sizable. One example is Generate Capital, which had a $1.5 billion investment this year on top of previous investments of $1.1 billion in 2023 and a further billion in 2021. Their business is not just sustainable energy, but also transport, mobility and whole cities. 
 
It is unlikely the energy problems of the US and big tech are going to be resolved in the next few years. This means price rises for consumers of energy, including the public and tech. However, it also looks likely that it could limit Bitcoin mining, which will hike up prices. This may only be a temporary issue if long term solutions can be explore.