And according to his analysis, gold consumes much more energy than bitcoin. In comparison, the traditional banking system consumes more energy than bitcoin or gold.
Given bitcoin’s transparency, “it’s easy” to calculate its energy consumption, but the same can’t be said for the traditional banking system as well as the gold industry, the report says.
“Bitcoin is most often compared to the traditional banking system (for payments, savings, and settlement) and gold (as a non-sovereign store of value). But the energy use of these industries is opaque because they do not publicly disclose their footprint energy, ”Galaxy Digital Mining wrote.
The Galaxy Digital Mining team has written an excellent white paper examining #bitcoinenergy consumption of.
Did you know that 19 times more energy is lost during transmission than Bitcoin miners consume? Great research here – and we’ve opened up our methodology. Https://t.co/bTR40GdiSP pic.twitter.com/wjd92RmC1l
– Galaxy digital search (@glxyresearch) May 14, 2021
Bitcoin’s annual electricity consumption is currently around 113.89 TWh (terawatt-hours). To help put this figure into perspective, the report points out that the annual global energy supply is around 166,071 TWh.
“There is no denying that the Bitcoin network consumes a substantial amount of energy, but this energy consumption is what makes the Bitcoin network so robust and secure,” the report notes.
In comparison, the total annual energy consumption of the gold industry is approximately 240.61 TWh. It was much more difficult to reach that number, admitted Galaxy Digital Mining.
“To compare this to Bitcoin’s electricity consumption, we only considered direct GHG emissions (scope 1), indirect electricity emissions (scope 2) and all emissions associated with the refining and recycling of gold. The annual GHG emissions from these segments amounted to 100,408,508 tCO2. We then converted the number of GHG emissions to kWh / year using an IEA global carbon intensity multiplier of 0.92 lb CO2 / kWh16. Using this multiplier, we estimate that these parts of the gold industry use around 240.61 TWh / year, ”the report says.
Energy consumption in the banking sector has been the most difficult to calculate, according to the report, which puts annual consumption at around 263.72 TWh. That’s at least twice that of bitcoin.
“Electricity data for the banking sector is scarce. With the publicly available information that we were able to find, we estimate that the banking system uses 263.72 TWh of energy each year, ”the report says. “The banking system does not communicate the electricity consumption data necessary for the operation of its data centers. Several assumptions have been made to estimate this figure. “
The four areas of energy consumption included in this figure are bank data centers, bank branches, ATMs, and card network data centers.
Galaxy Digital’s report comes after Bitcoin saw a sell off late last week, which continued over the weekend and Monday. The drop was originally triggered by Musk’s decision to halt Tesla’s vehicle purchases with Bitcoin.
“Tesla has suspended purchases of vehicles using Bitcoin. We are concerned about the increasing use of fossil fuels for Bitcoin mining and transactions, especially coal, which has the worst emissions of all fuels, ”Musk said last week.
The trend of energy consumption in the last few months is crazy https://t.co/E6o9s87trw pic.twitter.com/bmv9wotwKe
– Elon Musk (@elonmusk) May 13, 2021
Bitcoin’s sale accelerated over the weekend after Musk did not deny reports that Tesla could sell what at one point was a $ 1.5 billion stake in Bitcoin, which has was acquired earlier this year.
In a Twitter exchange with @CryptoWhale, Musk appeared to agree with the statement which read:
“Bitcoiners are going to slap themselves next quarter when they find out Tesla has thrown away the rest of their #Bitcoin holdings. With the amount of hate @elonmusk becomes, I wouldn’t blame him… ”
The CEO of Tesla replied: “Indeed”.
– Elon Musk (@elonmusk) May 16, 2021
At the time of writing, bitcoin was trading at $ 44,352, down more than 8% on the day.
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