The rapid expansion of AI data centers is reigniting a long-standing debate over energy consumption, with critics arguing that large-scale computing operations, including Bitcoin mining, are straining the power grid and driving up electricity prices.
As Cointelegraph previously reported, the surge in AI data center construction is fueling local resistance in some parts of the US, with residents and lawmakers expressing concerns about rising power demand and electricity prices. Bitcoin (BTC) mining is increasingly intertwined with broader discussions about high-density computing infrastructure.
In a recent research note, crypto investment firm Paradigm rejected that theory, arguing that Bitcoin mining is frequently misunderstood and mischaracterized in public energy discussions. Rather than treating mining as a static energy drain, Paradigm positions mining as a participant in electricity markets that reacts to price signals and grid conditions.
Paradigm’s Justin Slaughter and co-author Veronica Irwin also challenge some common assumptions used in energy modeling. For example, they point out that some analyzes measure Bitcoin’s energy usage on a transaction-by-transaction basis, even though mining energy consumption is related to network security and competition among miners, not transaction volume.
Other models assume that energy production is effectively unlimited or that miners will continue to operate regardless of profitability, but Paradigm argues that this assumption is unrealistic in competitive electricity markets.
According to Paradigm, Bitcoin mining currently accounts for about 0.23% of global energy consumption and about 0.08% of global carbon emissions. Paradigm argues that long-term energy growth will be limited by economic incentives, as the network’s issuance schedule is fixed and mining rewards decrease approximately every four years.
sauce: Daniel Batten
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Bitcoin mining as flexible grid demand
A central pillar of the paradigm’s argument is demand flexibility.
Bitcoin miners typically look for the lowest cost power, typically sourced from surplus or off-peak generation.
Mining operations can adjust consumption based on grid conditions, reducing usage during periods of stress and increasing usage when supply exceeds demand. In that sense, Paradigm describes mining as a flexible load, similar to energy-intensive industries that react to real-time price signals.
As AI data center expansion accelerates, this discussion takes on new urgency. As Cointelegraph recently reported, some of the crypto-era infrastructure is now being repurposed to support artificial intelligence workloads, with companies moving from Bitcoin mining to AI data processing in pursuit of higher profits. Several traditional Bitcoin miners have begun partial migrations, including Hut 8, HIVE Digital, MARA Holdings, TeraWulf, and IREN.
Paradigm’s report shifts the discussion from environmental concerns to grid economics by framing extraction as responsive demand rather than continuous consumption. The implication for policymakers is that Bitcoin mining should be evaluated within broader electricity markets, rather than simplistic energy comparisons.
Related: The real “supercycle” is not cryptocurrencies, but AI infrastructure: Analyst
