Amid long-standing concerns about Bitcoin (BTC) energy use, new research shows that the traditional banking system uses much more power than the Bitcoin network.
On Friday, Michael Novogratz’s cryptocurrency company Galaxy Digital released a report entitled “Bitcoin Energy Consumption: A Quantitative Approach to a Personal Question”, which provides open access to the methodology and calculations.
A study prepared by the Galaxy Mining Division estimates Bitcoin’s annual power consumption at 113.89 TWh, including energy for mining needs, power consumption, total power consumption and node consumption. Galaxy estimates that this amount is at least half of the total energy consumption of the banking system, as well as the gold mining industry, on an annual basis.
Source: Galaxy Digital
While Bitcoin’s energy consumption is transparent and easily tracked in real time using tools such as the Cambridge Bitcoin Electricity Consumption Index, it is not easy to assess energy use in the gold mining industry and in the traditional economic system, Galaxy Digital Mining notes.
“The banking industry does not directly report electricity consumption data,” the report states, adding that several levels of settlement are required for retail and commercial banking, while Bitcoin offers final settlement. Based on Galaxy estimates of energy consumption through bank data centers, bank branches, ATMs and card network data centers, the total annual energy consumption of the banking system is estimated at 263.72 TWh worldwide.
To calculate energy consumption in the gold mining industry, Galaxy Digital Mining has made estimates of the total greenhouse gas emissions in the industry that are included in the World Gold Council report Gold and Climate Change: Current and Future Impacts. The study estimates that the gold mining industry uses approximately 240.61 TWh per year. Galaxy notes that “these estimates may not include major energy use and emissions that are secondary effects of the gold mining industry, such as energy and carbon intensity of tires used in gold mines.”
Galaxy Digital’s Bitcoin power consumption analysis came amid a major collapse in the crypto market that followed Tesla’s CEO Elon Musk’s decision to stop accepting BTC as payment for car purchases due to environmental concerns. “Cryptocurrencies are a good idea on many levels, and we believe they have a promising future,” the CEO wrote on Twitter last week.
Musk’s grips received widespread criticism from the cryptocurrency community, with some saying that SpaceX should convert its rockets to “more sustainable energy” so that they “do not look like ignorant big hypocrites.”
Cryptocurrency markets have fallen more than $ 500 billion since Musk reached out to Twitter with his announcement, with bitcoin falling below $ 43,000 today for the first time since early February. The CEO seems to have put more pressure on the market by suggesting that Tesla plans to remove Bitcoin from the balance sheet soon.