Data Centers’ Energy Demand Set to Double by 2026, Fueled by AI and Crypto Mining

Data Centers’ Energy Demand Set to Double by 2026, Fueled by AI and Crypto Mining

A new report from the International Energy Agency (IEA) indicates that data centers could consume twice as much electricity by 2026, largely driven by the growing demands of cryptocurrencies and artificial intelligence (AI). The rise in data centers, used for tasks such as Bitcoin mining and AI training, has raised environmental concerns due to the associated greenhouse gas emissions. The IEA’s annual electricity report reveals that in 2022, data centers, cryptocurrencies, and AI collectively accounted for around 2% of global electricity demand, utilizing 460TWh. Crypto mining alone contributed nearly 25% of this consumption, reaching 110TWh in 2022.

The IEA predicts that by 2026, electricity consumption from data centers, including those supporting cryptocurrencies and AI, could surge to 1,050TWh, potentially equivalent to adding an entire country’s worth of electricity demand. The United States, hosting 33% of the world’s approximately 8,000 data centers, is projected to experience rapid growth in data center electricity consumption, reaching 6% of the country’s demand by 2026, up from 4% in 2022. Ireland, with a low corporate tax rate, is expected to witness a substantial increase in data center-related electricity demand, accounting for almost a third of the country’s total by 2026.

The report highlights the challenges posed by the rapid expansion of the data center sector and its increased electricity demand on power systems globally. Issues such as housing development challenges in London, stressed power grids in Texas, and the impact on the electricity system are noted. The primary energy demands of data centers involve computing (40%), cooling (40%), and other IT equipment (20%).

The integration of AI intensifies the overall electricity demand of data centers, with Google Search anticipated to use up to ten times more electricity with full AI incorporation. The IEA foresees the AI industry consuming ten times more electricity in 2026 compared to the previous year. Electricity demand for cryptocurrencies is predicted to rise by 40% by 2026. Although renewable energy growth is expected to surpass coal, accounting for over a third of global electricity by 2025, energy efficiency improvements, such as adopting high-efficiency cooling systems, are crucial to manage the rising demand.

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