Bitcoin (BTC) is considered the largest and most important cryptocurrency on the market, but recently it has come under much criticism due to the high energy consumption related to its mining. However, a new study revealed that the traditional banking system uses far more electricity than the digital asset network.
The company specializing in blockchain and digital currencies Galaxy Digital released a new report last Friday. Titled “On bitcoin’s energy consumption: a quantitative approach to a subjective issue,” the study compiled open data from the cryptocurrency network and compared it to figures related to the traditional banking system and the gold industry.
Traditional finance consumes much more than bitcoin
Galaxy estimates that bitcoin’s annual electricity consumption is 113.89 TWh (terawatt-hours), including the energy demanded by miners, the network and the encrypted data blocks. What the study identified was that this figure is at least twice as low as the total spent by the banking system and also by the gold industry annually.
While the data related to the energy consumption of the bitcoin blockchain is fully accessible due to the transparent nature of its network, the numbers of banks, financial institutions and gold mining companies are much more complicated to obtain. Therefore, Galaxy projected estimates based on available information and compared the results.
“The banking sector does not directly report electricity consumption data,” says the report. Given the company’s estimates of energy use by bank data centers, branches, ATMs and card network servers, the total annual energy consumption of traditional finance is estimated at 263.72 TWh globally.
Gold industry also spends more energy than bitcoin
In order to calculate the energy consumption of the gold industry, the study used estimates for the total emissions of polluting gases provided in the report “Gold and climate change: current and future impacts”, of the World Gold Council. According to the figures found by Galaxy, this sector uses about 240.61 TWh per year.
“These estimates can exclude the main sources of energy use and emissions, which are side effects of the gold industry, such as electricity and pollution related to tires and other materials and tools used in gold mines,” the study noted. .
Bitcoin is polluting due to its energy matrix
As much as the numbers are not official, they provide an overview of the whole that involves discussing environmental impacts. But some important questions have not been answered. Bitcoin is not pollutant by the amount of energy used in its mining, but by the energy matrix prevalent in the activity.
Since China accounts for 65% of the BTC hash rate in the world, according to the Cambridge Bitcoin Electricity Consumption Index, most computers and machines that process transactions and maintain the cryptocurrency blockchain are supported by thermoelectric plants coal-fired. Therefore, Elon Musk, Tesla’s CEO, announced that his electric car company will no longer accept digital currency due to concerns about its environmental impact.
Criticism by environmentalists has had a very negative effect on the cryptocurrency market, while Musk’s recent statement was one of the factors responsible for causing the digital currency to plummet in recent days, reaching its lowest price since February.
With information: Cointelegraph