By 2026, electricity demand from data centres, artificial intelligence (AI), and the cryptocurrency sector could double. So says a new report from the International Energy Agency (IEA). This surge reflects the rapid growth and integration of these technologies into every facet of our lives, as well as the need to find sustainable solutions as adoption grows.
The data centre dilemma
In 2022, data centres were already a significant energy consumer, using approximately 460 terawatt-hours (TWh). If current trends continue, the IEA forecasts this figure could exceed 1,000 TWh by 2026, an amount comparable to Japan’s entire electricity consumption.. Data centres, with their vast arrays of servers and cooling systems, are becoming increasingly integral to our digital existence, yet their environmental impact cannot be overlooked.
Cryptocurrency’s growing electricity demand
The cryptocurrency sector, particularly Bitcoin and, historically, Ethereum, has also been a notable contributor to increasing energy demands. In 2022, the sector consumed about 110 TWh, accounting for 0.4% of the global annual electricity demand – equivalent to the total electricity consumption of the Netherlands. Despite Ethereum’s impressive reduction in electricity demand by 99% in 2022 due to protocol updates, the overall energy consumption of cryptocurrencies is anticipated to rise by over 40% to around 160 TWh by 2026.
Regulatory measures and efficiency improvements
To address these challenges, efficiency improvements and regulatory measures are crucial. The European Commission’s revised Energy Efficiency Directive is one highlighted example, promoting transparency, accountability, and sustainable practices within the data centre sector. Within the cryptoasset sector, tailored cryptoasset sustainability standards such as those proposed under the EU’s Markets in Crypto-Assets Regulation (MiCA), more information about which here, are approaching the issue from a cryptoasset perspective. Such initiatives are vital in our journey towards a more sustainable digital future.
Oxygen: aiming towards a more sustainable future for digital assets
Against this backdrop, Zumo’s Oxygen product emerges as a more critical solution than ever. Oxygen is a comprehensive, done-for-you enterprise service designed to tackle the environmental impact of digital asset holdings. For asset managers and institutional providers, Oxygen offers a path to align cryptoasset offerings with robust ESG objectives.
Learn more about how Oxygen is paving the way for sustainable digital asset management: https://zumo.tech/oxygen/
For a further understanding of the electricity demands in data centres, AI, and cryptoassets, and their implications, we recommend reading pages 31 to 38 of the IEA report: https://www.iea.org/reports/electricity-2024