Bitcoin uses half the energy of the banking system, according to a recent report

By: Bhatggavi Ssayee

Bitcoin uses half the energy of the banking system, according to a recent report

June 7, 2021 3:46 AM

Elon Musk justified Tesla's decision to stop investing in Bitcoin for ecological reasons. Real reason or excuse? Regardless, his tweet has brought the debate around Bitcoin and the environment back to the table more than ever. A report has just been produced by Galaxy Capital, the crypto firm of Michael Novogratz on this subject. Let's discover its main features as well as the reserves of this study.


Bitcoin uses less energy than the traditional banking system

The title of the report is edifying to say the least: "Bitcoin's energy consumption: a quantitative approach to answer a subjective question"! The main conclusion of the report is that Bitcoin consumes less than the traditional banking system or the gold industry.


More specifically, the annual energy consumption of Bitcoin is estimated at 113.89 TWh. This figure takes into account the resources required for Bitcoin mining. In comparison, the traditional banking system would consume approximately 263.72 TWh each year. Consumption by the gold industry is estimated at 240.61 TWh.


The limits of this report

The study has the advantage of being transparent by giving the sources of all the figures put forward. However, intellectual honesty obliges us to set certain limits on this study. Without questioning the results, however, it should be borne in mind that the study was produced by a crypto firm, so not necessarily neutral on the subject.


Moreover, the comparison in terms of energy consumption is always a difficult exercise to do. Why ? While Bitcoin data is relatively accessible, this is not the case with bank or gold data. It is therefore difficult to calculate with precision the energy consumption of these two areas. To take this aspect into account, the report's drafters say they have been conservative with regard to the figures put forward.


While the partisan side of the report can and should be emphasized, it has the merit of providing a reasoned answer to a sensitive question. In addition, these figures are to be compared to others such as those of the pollution caused by the petrodollar. On this subject, Alex Gladstein (chief strategy officer at Human Rights Foundation) and McGinniss (co-founder of David Energy) recently said they were surprised that people are so critical of Bitcoin when they should be more. on the dollar.