Question If you are tracking the energy in a system, but the total energy seems to be going down, where has the energy gone ?

Explanation:

When the wire is connected to a battery, the compass needle moves and changes its position. This happens because the needle magnetizes the copper wire, thus,  creating a force.

While the current in the wire produces a magnetic field and exerts a force on the needle. The insulation on the wire becomes energized and exerts a force on the needle. Hence, the compass needle moves and changes its position.