Bitcoin Consumes Less Energy than Banking and Gold

Bitcoin Consumes Less Energy than Banking and Gold

The cryptocurrency industry has been on a roller coaster ride since Elon Musk, CEO of Tesla (NASDAQ: TSLA), announced that it will stop accepting Bitcoin as a means of payment due to environmental issues.

Consulting firm Galaxy Digital has published a report on Bitcoin's energy consumption , detailing how it consumes less than traditional financial industries and the value it can bring.

The analysis uses various calculations to determine how much energy the Bitcoin network uses and how it compares to the banking and gold industries.

The authors note that criticism of energy use is rarely applied to traditional industries.

The authors accept that the Bitcoin network consumes a great deal of power, but they claim that this is exactly what protects the network and makes it so robust, explains Yahoo (NASDAQ: AABA ) Finance .

According to calculations by Galaxy Digital, the annual electricity consumption of Bitcoin is estimated at 113.89 terawatt- hours (TWh) per year. From some perspective, the energy consumption of always-on devices in the US is 1,375 TWh / year, or 12.1 times the consumption of Bitcoin.

The consumption of the gold and banking industries is difficult to estimate due to the lack of data on energy use. This makes it difficult to "have an honest conversation" about Bitcoin's energy use, study notes.

For the gold industry, experts have analyzed all the processes involved, including those that emit greenhouse gases directly, those that emit them indirectly, and emissions from refining and recycling.

Multiplying the total 100,408,508 tCo2 in emissions with the IEA global carbon intensity multiplier, the total energy consumption of the gold industry is estimated to be 240.61 TWh / year.

The report describes the banking industry as more difficult to measure because it does not directly report electricity consumption data. However, you need bank data centers, bank branches, ATMs, and card network data centers.

With this rough classification of energy consumption sources, the banking industry's energy consumption estimate is 238.92 TWh / year, 2.3 times that of Bitcoin.

Tesla y Bitcoin

The report follows Tesla's decision to stop accepting BTC for payments due to concerns about its energy use. Bitcoin's energy consumption has been a hot topic for years, but only with recent headlines has it become one of the most prominent. However, the real argument behind Bitcoin's power consumption is that the value it brings may justify it to some extent. Galaxy Digital notes that value is subjective and that the general public is still undecided about the usefulness of Bitcoin.

Created on 18th May 2021