Crypto firm Galaxy Digital presents a report that compares Bitcoin’s electricity consumption to that of major banks. The result. Bitcoin doesn’t even use half of it.
Concerns about the high energy consumption of Bitcoin (BTC) are raised time and time again. Elon Musk recently announced that he will no longer accept Bitcoin payments for Tesla cars. He justified this with the rapid increase consumption fossil fuels, especially for Bitcoin mining. Now, however, a recent study indicates that the traditional banking system uses a lot more energy than the whole Bitcoin network.
Mike Novogratz’s Galaxy Digital cryptocurrency company released a report Friday looking at Bitcoin’s energy consumption relative to the bank. The report offers “a quantitative approach to a subjective question”, as it says in the subtitle. Galaxy also provides open source access to its methodology and calculations.
The study carried out by the mining arm of Galaxy estimates the annual electricity consumption of Bitcoin at 113.89 TWh. This includes the power consumption of all miners, pools, and nodes. This volume is at least twice the total energy consumption of the banking system and the gold industry – independently of each other – on an annual basis, according to Galaxy estimates.
According to the study, Bitcoin’s energy consumption is transparent and easy to track in real time using tools such as the Cambridge Bitcoin Electricity Consumption Index. However, assessing the energy consumption of the gold industry and the traditional financial system is not that simple, according to Galaxy Digital Mining.
There is no doubt that the Bitcoin network has a high demand for energy. But this energy consumption makes the network stable and secure. For critics, power consumption is a boon. But this review begs the question: compared to what is the high energy consumption?
Based on Galaxy estimates of the power consumption of bank data centers, bank branches, ATMs and card network data centers, the total annual power consumption of the banking system is estimated at 263, 72 TWh worldwide. This figure is based on estimates because the banking sector does not directly report data on electricity consumption. This also applies to the gold industry which, according to the study, consumes 240.61 TWh per year.
As I said, the subjective approach to the question can already be seen from the subtitle of the study. Of course, Galaxy Digital (which plans an IPO in the second half of 2021), as financial service provider specializing in crypto assets, has a great interest in a representation of the Bitcoin energy balance. Nonetheless, everyone is welcome to comment on GitHub’s estimates for banking and gold. sectors.
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