Energy Consumption: Banks vs. Bitcoin
A report by Galaxy has revealed that traditional banks use more energy than Bitcoin. The report estimates that the banking system uses 263.72 TWh of energy each year while Bitcoin consumes about 113.89 TWh/yr in total. It added that Bitcoin consumed a substantial amount of energy as the energy consumption made it robust and secure.
Galaxy Digital’s research paper responds to the growing scrutiny surrounding the electricity consumption of Bitcoin’s blockchain. The banking system gets through 263.72 terawatt hours of energy each year with data centers, financial institutions, ATMs, card networks, and bank branches all contributing. The paper warns that this figure could end up being conservative as banks don’t disclose their energy usage.
Cryptocurrency Sustainability
As Bitcoin is more widely accepted now, the sustainability of this technology is scrutinized. Cryptocurrency works through crypto mining, which requires significant computing power and thus electricity from sources like coal and gas. Besides mining, maintenance and security also consume lots of energy.
However, using renewable energy to power Bitcoin mining means it won’t be available to power homes, factories or electric cars. In 2018 the electricity usage for mining new bitcoin has greatly increased, cited as a reason for companies withdrawing Bitcoin support.
Banking Energy Use
A new report shows that the banking system consumes more than twice the amount of energy that bitcoin does. The authors analyzed bitcoin’s energy usage and compared it to the banking and gold industries.
The Galaxy Digital study claims that, by their calculations, bitcoin’s energy consumption is less than half that of the traditional banking system, which it estimates at 263.72 terawatts per hour. The crypto world is largely dependent on fossil fuels. As the price of Bitcoin increases, so does the amount of energy consumed as miners mine coins with the price rise, attracting more users.
For an ATM with 2 air conditioners and lighting, the average daily power consumption comes around 48 kWh. The Digiconomist’s Bitcoin Energy Consumption Index estimated that one Bitcoin transaction takes 1,544 kWh or the equivalent of 53 days of power for the average US household.
Bank managers concerned about energy usage can search for reputable bank energy suppliers locally. Branch offices account for 90% of the industry’s total energy use. One-third of the expenses at any given site are attributable to energy. Since energy production and consumption have such a large influence, it’s only fair that sectors like banking consider minimizing their energy footprint.
Data analysis of Bitcoin and Lightning shows that banking needs more energy, demonstrating Bitcoin is better for the planet. It is accepted that Bitcoin mining is extremely polluting. However, banking uses 2.88% of all energy. This means banking is responsible for 2.88% of global energy consumption. In comparison, Bitcoin’s 0.05% is almost insignificant, although its total volume is dwarfed by traditional banking.
The median bank branch is approximately 4,000 square feet and operates 50 hours per week. Source energy enables the most complete and equitable energy assessment as it includes losses from generation, transmission, and distribution. The characteristics that affect energy use in bank branches are size, hours of operation, and source energy.