The international banking system and the gold industry consume more than twice the electrical energy that Bitcoin requires to stay in operation, Galaxy Digital explains in its most recent report.
Given the controversy that Tesla caused with the suspension of payments in Bitcoin (BTC), considering that the operation of the cryptocurrency can cause serious damage to the environment due to its high energy consumption, the American firm Galaxy Digital points out that the reality is that the international banking system and the gold exploitation industry consume much more energy than the network requires blockchain to stay running.
In a report recently published, Galaxy Digital compares the energy consumption of banks, the gold industry and Bitcoin, showing how the energy consumption carried out by miners to keep the network operational is barely half of the energy demand of traditional banks and the gold industry.
Source: Galaxy Digital
In the graph, Galaxy Digital points out that Bitcoin's annual energy consumption is, on average, between 100 and 120 TWh, a figure that coincides with the data published by the International Energy Agency (IEA), which estimates Bitcoin's energy consumption at about 118 TWh per year, according to its Bitcoin Energy Consumption Index. This figure represents about 0,44% of the total energy used in the world.
For its part, Galaxy Digital shows that the energy consumption of the international banking system exceeds 250 TWh per year, a figure that is clearly well above the energy expenditure of the cryptocurrency. Likewise, the gold industry demands about 240 TWh of energy per year as a non-sovereign reserve of value; This without considering the serious physical damage that deforestation, explosions, excavations, the use of chemicals and more, for the extraction of the precious metal, cause to the environment.
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Controversies over Bitcoin's energy consumption
For years, several detractors of cryptocurrencies have been responsible for demonizing the use of Bitcoin, as a blockchain network whose energy consumption and carbon emissions will destroy the planet. Although Galaxy Digital is not unaware that the energy consumption of the network is high, it shows that the international banking system, which has been in operation for many decades, is much more aggressive in this regard.
Likewise, Galaxy Digital highlights that the miners of the Bitcoin network, like the banks, are looking for renewable energy alternatives to cover their demand and minimize their carbon footprint and environmental risks.
Anthony Pompliano, one of the leading experts in the crypto industry, pointed out that about 75% of Bitcoin miners use clean energy sources to guarantee the operation of their mining farms. For their part, the signatures Argo Blockchain y DMG Blockchain recently entered into an alliance to create a working group focused on the research and analysis of alternative energy sources for cryptocurrency mining, while also focusing on the creation of new technologies that guarantee transparency and reliability on the energy consumption of blockchain networks.
Bitcoin Transparency vs Banks and Gold
Galaxy Digital analysts highlighted that one of the causes that has sparked controversy regarding the energy consumption of Bitcoin is the high level of transparency, which this cryptocurrency and alternative financial system offers in every sense, and which is not compared to the dark functioning of many banks, and especially the gold industry.
The actual data provided by the latter two, the banks and the gold industry, can be quite scarce, and available only to a select group, so many people will not realize the reality of the high energy expenditure that carried out by these industries to guarantee their functioning and operability.
“Given Bitcoin’s transparency, it is easy to estimate Bitcoin’s energy usage… This results in frequent criticism of Bitcoin, but these criticisms are rarely applied to other traditional industries.”
Bitcoin's transparency covers all aspects related to its operation, from the mining process to the confirmation and execution of transactions, making it easy to estimate its real consumption; while in the traditional banking system there are many aspects that are not clear. Galaxy Digital stated that the energy consumption of the world's central banks is not considered in its report. Thus, the energy consumption of the international banking system is much higher than the estimated 250 TWh.
Bitcoin, acceptable energy consumption
After its in-depth analysis, Galaxy Digital concluded that the electricity consumption of the Bitcoin network is definitely an acceptable energy use globally.
“So if we return one last time to the original question: Is the electricity consumption of the Bitcoin network an acceptable energy use? Our answer is definitive: yes.”
Bitcoin is an alternative financial system created to return power and financial freedom to its users, providing opportunities of value to everyone equally, Michael saylorCEO microstrategy, the largest institutional investor in the cryptocurrency, noted that “There is no more efficient technology to convert energy into prosperity” than Bitcoin.
Recently, Square y Ark Investment published a document where they highlight how Bitcoin has become a technology that is promoting the discovery of new sources of clean and renewable energy for the world, since the growing need and demand for cryptocurrency has driven miners to accelerate the energy transition world towards new renewable energy sources, which guarantee their operability and sustainability over time.
Continue reading: Bitcoin mining, an opportunity for the production of clean and renewable energy
