Big banks need more energy than Bitcoin

The crypto company Galaxy Digital presents a report that compares the electricity consumption of Bitcoin with that of the major banks. The result. Bitcoin doesn’t even use half as much.

Concerns about the high energy consumption of Bitcoin (BTC) are raised again and again. Last had Elon Musk even announcesto stop accepting Bitcoin payments for Tesla cars. He justified this with the rapidly increasing consumption of fossil fuels, especially for Bitcoin mining. Now, however, a recent study says that the traditional banking system uses a lot more energy than the entire Bitcoin network.

Mike Novogratz ‘cryptocurrency company Galaxy Digital released on Friday a report, which deals with Bitcoin’s energy consumption compared to banking. The report offers “a quantitative approach to a subjective question”, as it says in the subtitle. Galaxy also provides one Open source access on his methodology and his calculations.

The study carried out by Galaxy’s mining arm estimates Bitcoin’s annual electricity consumption at 113.89 TWh. This includes the power consumption of all miners, pools and nodes. This volume is at least twice less than the total energy consumption of both the banking system and the gold industry – independently of one another – on an annual basis, according to Galaxy estimates.

Banks’ energy consumption is not transparent

According to the study, Bitcoin’s energy consumption is transparent and easy to track in real time using tools like the Cambridge Bitcoin Electricity Consumption Index. However, evaluating the energy consumption of the gold industry and the traditional financial system is not that easy, according to Galaxy Digital Mining.

There is no doubt that the Bitcoin network has a high energy demand. But this energy consumption makes the network stable and secure. For critics, the energy consumption is a godsend. But this criticism begs the question: Compared to what is the energy consumption high?

Based on Galaxy estimates of the power consumption of 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. This figure is based on estimates because the banking industry does not report electricity consumption data directly. This also applies to the gold industry, which according to the study consumes 240.61 TWh per year.

As I said, the subjective approach to the question is already evident from the subtitle of the study. Of course, Galaxy Digital (which is planning an IPO in the second half of 2021), as a financial services provider specializing in crypto values, has great interest in a positive representation of the Bitcoin energy balance. Nonetheless, everyone is invited to comment on the estimates for the banking and gold sectors via GitHub.