Most are aware that AI is an energy hog. This is an area of focus for these companies. Grids will quickly become strained if careful attention is not given. For this reason, Big Tech firms are getting creative where they put their data centers.
As we progress further, GPUs get more energy efficient. This does not, however, offset the massive increase in data being generated. Couple this with the draw for training language models and we see why the likes of Meta set up a center on the property of a nuclear facility.
A number of years back, a big deal was made about Bitcoin's energy consumption. This is now being dwarfed by the usage of AI. There is, however, one issue: they are both competing for energy.
Does this mean that Bitcoin will have issues going forward?
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Bitcoin and AI: In An Energy Fight
There is no stopping this train. We will see hundreds of billions of dollars going into AI infrastructure (read GPUs) through the rest of this decade. This means a lot of advancement regarding energy is required.
Fortunately, there are gains made through better algorithm design, transformer advancement, and battery technology. Couple this with the energy gains from GPUs, this is massive.
The flip side of this coin is that it is still dwarfed by the projected demand. Again, the size of these clusters will only increase over time.
The International Energy Agency estimates that the combined energy consumption of Bitcoin mining and AI will surge to 1,050 TWh by 2026 and this quantity of energy is enough to power an entire country.
For the Bitcoin Network, much of the energy is from renewables. The estimate places it at around 70%. Contrast this with data centers which still are located in major areas, pulling from the traditional grid.
This is one defense that Bitcoin has. That said, it is not completely on renewable energy so there is still some vulnerability.
It is likely that we see Bitcoin mining companies continue their move in the renewable direction. This is actually part of their business model due to the fact that a reduction in energy costs helps the profitability.
Another likely shift will occur from Big Tech. The Meta example is not the only one. Other projects are looking at "out of the way" places where energy is available. Data centers, after all, do not require location near major populations. The data is transmitted around the world in milliseconds so what difference does it make?
Bitcoin and Blockchain
There was a time, in the early days, where Bitcoin was the only game in town.
Today, that is not the case. We are seeing the introduction of networks on a regular basis. Blockchain is evolving with many different networks starting to take hold. When we look at the capabilities, there is marked difference from what Bitcoin offers.
Many focus upon the financial aspect of BTC. However, if we look at the technological, i.e. data storage, this is where it trails.
Other networks are presenting opportunities for applications that are tied to the AI move. Hence, the separation of blockchain and AI is not valid in my opinion. In fact, Web 3.0, as a central component, is AI driven. At the same time, one of the data structures is going to utilize blockchain.
We can see how the AI advancements can aid many of these networks. There is already Qtum which has a chatbot and image generator built on it. This quickly shows how there is no separation between the two.
Which brings up the situation with Bitcoin? What role will it play in the future?
There is no doubt it will remain. In fact, with regards to coin popularity, it shows no signs of declining. If anything, the moves by Wall Street will only enhance the demand for this asset.
Of course, therein lies the issue.
With Bitcoin, there is potentially great demand for the asset. The technology, that is another story. Few are rushing towards the Bitcoin network with cutting edge stuff. While the shift to blockchain is slow overall, it is safe to say that technological innovation of this nature is not being directed on the Bitcoin network.
The AI Race
It is no secret that we are in one of the most exciting races of all time. There is a lot riding on the results, with companies looking to stake their position.
This is big than just single companies, even when the ones involved are enormous. It is a race between countries. The United States and China, for example, are waging an all out brawl over this. To believe the West is the only one in this realm is a major mistake.
Ultimately, all of this comes down to energy. Bitcoin mining was innovative in solving their energy needs. There were some breakthroughs such as grid-scale storage and software design to reduce heat waste. We also saw feedback loops developed where the waste energy thrown off was fed back in.
We are likely near the point where the size of Bitcoin, as compared to these other clusters, will be minimal. The next generation of models is expected to be trained on 100K GPUs. After that, we can expect another jump.
Countries that win the AI race will be the ones who win the energy battle. These two are inseparable.
Hence, we are going to require energy breakthroughs over the rest of this decade. Each layer of the electrical system is receiving attention.
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Energy security is essential for any future government to ensure stability, economic growth, and sustainability. Investing in renewable resources and resilient infrastructure today paves the way for a prosperous tomorrow. 🌍⚡️
The sweetest part is that of Bitcoin and Blockchain. Indeed, the features of Blockchain are more beautiful than Bitcoin. Blockchain is expanding the breeding monetizing platform for many.
To me, Bitcoin will soon back out.
Thank you for sharing.
I feel the energy sector and storage is already presenting itself as big opportunity. It's just the setup cost that will limit small investors from making this early benefit.
Will the day come when BTC transitions to proof of stake like ETH, due to its high energy consumption? It's something I've been wondering about lately, maybe it's not so far-fetched to imagine that scenario.
Bitcoin has long been criticized for its energy usage, largely due to the Proof of Work (PoW) consensus mechanism that requires vast algorithmic resources.
While the Bitcoin network has increasingly moved towards renewable energy sources, the competition for energy between Bitcoin and AI could strain global energy grids. This competition may push Bitcoin miners to further optimize their energy efficiency and reliance on renewables to remain viable.
As AI and crypto gain more popularity, it seems the energy sector needs to step up. Area wise, nuclear seems the best answer, since solar, wind and other renewable options take up too much space. It will be interesting to see how governments handle these.