The cryptocurrency investment company claims that Bitcoin mining is being unfairly grouped with AI data centers. They say that miners are not consistent energy drains but rather flexible grid demand.
The quick growth of AI data centers has brought back a long-running discussion about energy use. Critics say that big computing operations, like Bitcoin mining, put a lot of stress on power systems and raise electricity prices.
The rise in AI data centre building has led to municipal opposition in some parts of the US, with people and lawmakers worried about rising electricity bills and power consumption. Bitcoin mining (BTC $68,383) has become more and more connected to the bigger discussion over high-density computer infrastructure.
Mining compared to AI data center expansion
Paradigm, a crypto investment business, pushed back against that story in a recent research note. They said that Bitcoin mining is often misunderstood and mischaracterised in public conversations about energy. Paradigm doesn’t see mining as a static drain on energy; instead, it sees it as a player in power markets that reacts to price signals and system conditions.
Justin Slaughter from Paradigm and co-author Veronica Irwin also question certain prevalent ideas that are utilised in energy modelling. For instance, they say that some studies look at Bitcoin’s energy use per transaction, even though mining energy use is related to network security and competition between miners, not the number of transactions.
Some models assume that miners will keep working even if they don’t make money, or that energy production is practically unlimited. Paradigm says that these ideas don’t work in competitive electricity markets.
Paradigm says that Bitcoin mining now uses roughly 0.23% of the world’s energy and puts out about 0.08% of the world’s carbon. Paradigm says that long-term energy development is limited by economic incentives because the network’s issuance timetable is set and mining rewards go down around every four years.
Flexible demand and grid economics
Bitcoin miners usually look for the cheapest electricity, which is often from extra or off-peak generation.
Mining companies can change how much they use dependent on how the grid is doing. They use less when the grid is stressed and more when there is more supply than demand. In that sense, Paradigm calls mining a “flexible load,” which is like companies that use a lot of energy and respond to real-time price signals.
The argument has become more important as the growth of AI data centers speeds up. Some crypto-era infrastructure is now being used to support AI workloads. Companies are moving from Bitcoin mining to AI data processing to make more money. Several well-known Bitcoin miners, such as Hut 8, HIVE Digital, MARA Holdings, TeraWulf, and IREN, have started to make some changes.
Paradigm’s report changes the conversation from environmental alarmism to grid economics by portraying mining as responsive demand instead of steady consumption. This means that policymakers should look at Bitcoin mining in the context of the whole electrical market instead of just comparing it to other types of energy.