Banking uses more energy than Bitcoin

When super-tweeter, Elon Musk, announced nobody could pay for a Tesla with Bitcoin because of its detrimental effects on the climate, it caused upheaval with a downward trajectory in the crypto market. It probably seemed rather disingenuous of him to many, as he must have been aware of the energy usage in mining Bitcoin when he invested a billion or so in it and said people could buy a Tesla with Bitcoin. He also needs to look at the recent research study by Galaxy Digital shows the leading crypto is not the biggest climate culprit in finance.

Last week Galaxy Digital Mining released a report titled “On Bitcoin’s Energy Consumption: A Quantitative Approach to a Subjective Question.” They also provided open-source access to their research methodology and calculations. Here are some of the figures.

Galaxy’s mining department estimates Bitcoin’s annual electricity consumption to stand at 113.89 TWh. This includes miner demand, miner power consumption, pool power consumption, and node power consumption. It may seem like a lot of energy, but the banking system and the gold mining industry use twice as much as that every year.

A Galaxy bar chart shows that bank branches, ATMs and card networks use a relatively smaller amount of energy, but the banks’ data centres are massive energy consumers. Given Galaxy’s estimations of power usage by banking data centres, bank branches, ATMs, and card network’s data centres, the total annual energy consumption of the banking system is estimated to be 263.72 TWh globally. 

Furthermore, Bitcoin’s energy consumption is easy to track. You can look at it on the Cambridge Bitcoin Electricity Consumption Index for example. Whereas, trying to track the use of energy in gold mining or banking services is really quite difficult, because banking certainly doesn’t report the energy it uses.

The gold industry utilizes roughly 240.61 TWh per year, according to the Galaxy report, based on the World Gold Council’s data in its report, “Gold and climate change: Current and future impacts.” 

Returning to Musk’s statement that he was concerned about the impact of Bitcoin on the environment, which rightly provoked a barrage of fury from the crypto community, perhaps somebody can inform him that whatever bank he uses is doing far more damage. It would be great if he had the courage to tweet that out and set the record straight.

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