We rely on data centers to store our emails, photos, cat videos, and everything else floating around in the cloud. However, more and more data centers are being used to mine Bitcoin and train artificial intelligence. According to a new report from the International Energy Agency (IEA), data center electricity usage could double by 2026, thanks in large part to cryptocurrencies and artificial intelligence.
This has sparked a backlash over the environmental impact of cryptocurrencies and artificial intelligence tools like ChatGPT, as all these data centers are responsible for greenhouse gas emissions associated with electricity use. The world will need more renewable energy to clean up pollution from the grid while meeting surging power demand from data centers.
The annual electricity report released today by the International Energy Agency (IEA) shows that data centers, cryptocurrency and artificial intelligence account for about 2% of global electricity demand in 2022, consuming 460 terawatt hours. It is estimated that cryptocurrency mining alone will account for nearly a quarter of electricity consumption, consuming 110TWh of electricity in 2022.
Power consumption by data centers, including those used for cryptocurrency and artificial intelligence, could increase to 1,050 terawatt hours by 2026, depending on how quickly the technology develops. This increase is equivalent to increasing electricity demand in a country; in the more modest cases, it is equivalent to increasing electricity demand in Sweden; in the most extreme case, it is equivalent to increasing electricity demand in Germany.
Currently, the United States has the largest number of data centers, accounting for 33% of the approximately 8,000 data centers worldwide. The United States is also the country with the most Bitcoin mining. The International Energy Agency predicts that U.S. data center electricity consumption will "increase rapidly" in the next few years.
Ireland has one of the lowest corporate tax rates in the EU and is expected to see a boom in new data centres. By 2022, Ireland's 82 data centers will account for 17% of the country's electricity consumption. An additional 54 data centers are under construction or have recently been approved to begin construction. By 2026, all these data centers will account for nearly one-third of the country's annual electricity consumption.
The IEA report said: "The rapid expansion of the data center industry and increased power demand will create challenges for the power system. This risk is not unique to Ireland. In London, the power needs of data centers make it more difficult to develop more housing. Texas, the Bitcoin mining hub of the United States, has to deal with the pressure that new cryptocurrency mining farms (also known as cryptocurrency data farms) put on its already aging and overwhelmed power grid."
Since data centers are essentially warehouses of computers, 40% of power needs come from computing. The power requirements to keep all equipment cool account for another 40%, with the remainder coming from other IT equipment.
Adding artificial intelligence will increase the overall power requirements of the data center. The International Energy Agency reports that Google search power usage could increase tenfold if artificial intelligence were fully adopted. Similarly, the report predicts that by 2026, the artificial intelligence industry may consume ten times more electricity than last year.
Cryptocurrency electricity demand is expected to surge by 40% by 2026. There are already some success stories in limiting the energy and environmental footprint of cryptocurrencies. The Ethereum blockchain uses a more energy-efficient method of validating new transaction blocks, reducing electricity usage by more than 99%. Even so, the Bitcoin network has refused to follow suit and is responsible for most of the carbon emissions produced by cryptocurrency mining.
Fortunately, the International Energy Agency also predicts that global renewable energy will accelerate growth, and by 2025, its power generation will surpass coal and account for more than one-third of global power generation. But that doesn't solve all the challenges that come with new data centers. Arguably, improving energy efficiency, such as adopting efficient cooling systems, is also important, as too rapid growth in electricity demand threatens to outpace growth in renewable energy.