AI, Cryptocurrency Will Double Data Center Energy Consumption By 2026

Please consider the International Energy Agency IEA Electricity Analysis Report 2024-2026.

IEA Notable Points

  • Global electricity demand rose moderately in 2023 but is set to grow faster through 2026
  • Global electricity demand is expected to rise at a faster rate over the next three years, growing by an average of 3.4% annually through 2026.
  • Electricity consumption from data centres, artificial intelligence (AI) and the cryptocurrency sector could double by 2026.
  • About 85% of additional electricity demand through 2026 is set to come from outside advanced economies
  • China provides the largest share of global electricity demand growth in terms of volume, but India posts the fastest growth rate through 2026 among major economies.
  • EU electricity consumption is not expected to return to 2021 levels until 2026 at the earliest. Electricity prices for energy-intensive industries in the European Union in 2023 were almost double those in the United States and China.
  • Despite energy prices falling from their previous record highs, EU electricity demand further declined in 2023. Lower industrial electricity demand was the most important factor, as in the previous year.
  • Renewables are set to provide more than one-third of total electricity generation globally by early 2025, overtaking coal. The share of renewables in electricity generation is forecast to rise from 30% in 2023 to 37% in 2026, with the growth largely supported by the expansion of ever cheaper solar PV.
  • By 2025, global nuclear generation is forecast to exceed its previous record set in 2021.
  • Global CO2 emissions from electricity generation are expected to fall by more than 2% in 2024 after increasing by 1% in 2023.

Data Centers

We estimate that data centres, cryptocurrencies, and artificial intelligence (AI) consumed about 460 TWh of electricity worldwide in 2022, almost 2% of total global electricity demand. Data centres are a critical part of the infrastructure that supports digitalisation along with the electricity infrastructure that powers them. The ever-growing quantity of digital data requires an expansion and evolution of data centres to process and store it. Electricity demand in data centres is mainly from two processes, with computing accounting for 40% of electricity demand of a data centre. Cooling requirements to achieve stable processing efficiency similarly makes up about another 40%. The remaining 20% comes from other associated IT equipment.

There are currently more than 8 000 data centres globally, with about 33% of these located in the United States, 16% in Europe and close to 10% in China. US data centre electricity consumption is expected to grow at a rapid pace in the coming years, increasing from around 200 TWh in 2022 (~4% of US electricity demand), to almost 260 TWh in 2026 to account for 6% of total electricity demand. Growth will be driven by increased adoption of 5G networks and cloud-based services, as well as competitive state tax incentives.

Market trends, including the fast incorporation of AI into software programming across a variety of sectors, increase the overall electricity demand of data centres. Search tools like Google could see a tenfold increase of their electricity demand in the case of fully implementing AI in it. When comparing the average electricity demand of a typical Google search (0.3 Wh of electricity) to OpenAI’s ChatGPT (2.9 Wh per request), and considering 9 billion searches daily, this would require almost 10 TWh of additional electricity in a year.

In 2023, NVIDIA shipped 100 000 units that consume an average of 7.3 TWh of electricity annually. By 2026, the AI industry is expected to have grown exponentially to consume at least ten times its demand in 2023.

In 2022, cryptocurrencies consumed about 110 TWh of electricity, accounting for 0.4% of the global annual electricity demand, as much as the Netherland’s total electricity consumption. In our base case, we anticipate that the electricity consumption of cryptocurrencies will increase by more than 40%, to around 160 TWh by 2026. Nevertheless, uncertainties remain for the pace of acceleration in cryptocurrency adoption and technology efficiency improvements. Ethereum, the second largest cryptocurrency by market cap, reduced its electricity demand by an amazing 99% in 2022 by changing its mining mechanism. By contrast, Bitcoin is estimated to have consumed 120 TWh by 2023, contributing to a total cryptocurrency electricity demand of 130 TWh.


In China, the post-pandemic economic recovery paved the way for a strong increase in electricity demand of 6.4% in 2023, with the services and industry sectors experiencing the most robust rebound. With the country’s economic growth expected to slow and shift away from heavy industry, we forecast the pace of electricity demand growth to ease to 5.1% in 2024, 4.9% in 2025 and 4.7% in 2026, which is well below the average growth rate of 6.5% observed over the prepandemic period of 2016-2019. Electricity consumption per capita in China surpassed that of the European Union at the end of 2022. This is, however, propped up by the industry sector, as electricity use per household is still below that in the European Union. The rising consumption of electricity by Chinese households will remain a driver of electricity demand. Continued electrification of China’s industrial sector and strong growth in road transport (EV charging) accounts for an increasing share of China’s electricity demand over the forecast period. The rapid adoption of EVs, which now account for over 8% of the vehicles in the country, is markedly eroding growth in gasoline consumption in favour of electricity.

What About EVs?

Other than country-specific uses of EV including China there were only 6 mentions of EV in 170 pages, none of them for the US.

Artificial Intelligence’s ‘Insatiable’ Energy Needs Not Sustainable

The Wall Street Journal reports Artificial Intelligence’s ‘Insatiable’ Energy Needs Not Sustainable, Arm CEO Says

Rene Haas, chief executive of Arm, spoke ahead of an announcement Tuesday by the U.S. and Japan about a $110 million program to fund AI research at universities in the two countries. U.K.-based Arm and its parent, Tokyo-based SoftBank Group, are together offering $25 million in funding for the program.

AI models such as OpenAI’s ChatGPT “are just insatiable in terms of their thirst” for electricity, Haas said in an interview. “The more information they gather, the smarter they are, but the more information they gather to get smarter, the more power it takes.”

Without greater efficiency, “by the end of the decade, AI data centers could consume as much as 20% to 25% of U.S. power requirements. Today that’s probably 4% or less,” he said. “That’s hardly very sustainable, to be honest with you.”

the International Energy Agency said a request to ChatGPT requires 2.9 watt-hours of electricity on average—equivalent to turning on a 60-watt lightbulb for just under three minutes. That is nearly 10 times as much as the average Google search. The agency said power demand by the AI industry is expected to grow by at least 10 times between 2023 and 2026.

“It’s going to be difficult to accelerate the breakthroughs that we need if the power requirements for these large data centers for people to do research on keeps going up and up and up,” Haas said.

What’s Missing?

As noted the report barely touched on EVs with nothing on EVs in the US.

There were 13 mentions of the word “transformer” all related to weather related damage or the war in Ukraine.

There was no analysis of the need for more of them or updating the grid.

The deindustrialization of the EU is notable. But that will be replaced by exponential growth in India.

It’s nice that wind and solar are replacing coal but it would be faster and better to replace coal with nuclear and natural gas.

Note that Global CO2 emissions from electricity generation is only expected to fall by 2% in 2024 after increasing by 1% in 2023. Will it?

What happens when India and Africa industrialize?

There’s a lot of good and bad in the report but a lot that’s not covered as well. The infrastructure to handle a push to EVs and AI are not in place.

Those rooting for the end of fossil fuels by 2032 or even 2050 have no idea how foolish their demand are.

Good News

Looking for good news? I have some.

Please note Ford to “Re-Time” New EV Production, Expand Hybrid Production

EV adoption in the US is slowing.

If Trump wins the election, and I think that’s likely (See Trump Leads Biden in 6 of 7 Swings States, Pennsylvania is Key), he will set back EV adoption by years when he unwinds ridiculous EPA and Biden mandates.

In the EU, I expect a big anti-Green push in the upcoming European Parliamentary elections on June 6-9.

Back in the US, Tesla’s Deliveries Drop for First Time Since 2020, It’s Demand Not Supply

Finally, please note there are 4 Million Semis on the Road, Only 35 Class 8 Truck EV Charging Stations

Electrek says Tesla’s giga factory is only about 30% complete and Tesla hasn’t expanded the facility for years.

All of this is good news. The EV push is too fast. Neither the US nor EU is ready.

More By This Author:

Tesla’s Robotaxi August Launch Will Be More Elon Musk Vaporware
Reuters Reports Tesla To Scrap $25,000 Entry EV, Musk Cries Liar
Millennials Rush To Buy $2,300 Gold Bars At Costco

Disclaimer: The content on Mish's Global Economic Trend Analysis site is provided as general information only and should not be taken as investment advice. All site content, including ...

How did you like this article? Let us know so we can better customize your reading experience.


Leave a comment to automatically be entered into our contest to win a free Echo Show.