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Bitcoin’s mining huge energy usage has become a major cause of concern among investors that it has negatively impacted the crypto’s corporate adoption. For instance, Tesla recently announced that it has suspended accepting BTC as payment for its electric cars citing environmental concerns.
In a report published by Galaxy Digital, Bitcoin’s energy consumption has been compared to two industries that have become associated with the crypto recently. BTC has been described as a potential disruptor to the financial system and has also been labeled as digital gold as the crypto now competes with the precious metal as a store of value asset. Thus, the authors of the study decided to compare Bitcoin’s energy consumption to that of the banking system and the gold industry.
The report, which is titled “On Bitcoin’s Energy Consumption: A Quantitative Approach to a Subjective Question,” revealed that BTC’s entire energy usage is significantly lower than the banking and gold industries. According to Galaxy Digital’s estimate, the BTC network consumes 113.89 TWh per year in total.
The report broke down Bitcoin’s energy consumption estimate to that of miner demand, pool electricity consumption, miner electricity consumption, and node electricity consumption. “There is no denying that the Bitcoin network consumes a substantial amount of energy, but this energy consumption is what makes the Bitcoin network so robust and secure,” Galaxy Digital noted.
The study also made an estimate on the energy usage of the gold industry, which took into consideration both upstream processes (mining and refining) and downstream processes (jewelry fabrication/distribution, creation of investment products like bars and coins, and the metal’s use in electronic components).
“We estimate that these elements of the gold industry utilize roughly 240.61 TWh/yr,” the researchers wrote. “These estimates may exclude key sources of energy use and emissions that are second-order effects of the gold industry like the energy and carbon intensity of the tires used in gold mines.”
While the gold industry’s energy consumption is already significantly larger compared to Bitcoin’s, the banking industry’s usage is even higher. “We estimate the banking system uses 263.72 TWh of energy each year,” the report said. This figure includes estimates of the energy usage of bank branches, ATMs, banking data centers, and card network data centers.
The report said that energy consumption is not a bad thing. New technologies that require more power, such as blockchain and Bitcoin, will always be developed as it’s just part of the advancement of human civilization.
“Is the Bitcoin network’s electricity consumption an acceptable use of energy? Our answer is definitive: yes,” the report concluded.
