A recent research report by Galaxy Digital calculated the energy consumption of the Bitcoin network and then compared it to other industries, including banking. Bitcoin was found to consume 113.89 terawatt hours (TWh) per year while the banking industry consumes 263.72 TWh per year.
The report put Bitcoin’s energy consumption into perspective by highlighting some of Bitcoin’s unique characteristics and their relationship to and impact on Bitcoin’s energy use.
“Bitcoin is a fundamentally novel technology that is not an accurate replacement for a legacy system,” the report said. “Bitcoin is not just a settlement layer, not just a store of value and not just a medium of exchange.” There is no denying that the Bitcoin network consumes a significant amount of energy, but this consumption of energy is what makes it so robust and secure. “
Galaxy Digital compared the energy consumption of the Bitcoin network to that of the banking system as well as the gold industry, as the largest cryptocurrency is often compared to both. The report found that banks and gold use around 263.72 TWh per year and 240.61 TWh per year, respectively, while Bitcoin uses much less energy – 113.89 TWh per year.
After comparing the energy consumption of various sectors with that of Bitcoin, the report revealed the importance of energy to the Bitcoin network and how it can help the world reduce atmospheric pollution.
“Critics often assume that the energy used by miners is either stolen from more productive use cases or leads to increased energy consumption,” it says. “However, due to inefficiencies in the energy market, Bitcoin miners are encouraged to use non-competing energy, otherwise it will be wasted or under-used as this electricity is usually the cheapest.”
Galaxy Digital has also shown that a significant amount of the world’s energy generation is wasted – around 2,205 TWh per year, which is 19.4 times the bitcoin network.
“Although the revenues associated with mining vary, miners have the luxury of flexibility and can turn their equipment on or off at any time,” the report said. “This makes bitcoin mining the ideal energy sink: anyone, anywhere, you can monetize excess energy by plugging in devices and turning them off at will. An example of where bitcoin mining acts as an energy sink is oil fields leading to a direct Reduction of methane emissions. “
According to the report, oil fields currently generate around 40 percent of the world’s energy. However, they also often produce methane as a by-product, the greenhouse effect of which is 25 times more harmful to the environment than an equivalent amount of carbon dioxide.
“Bitcoin mining offers a solution,” the report said. “Companies like Great American Mining, Upstream Data and Crusoe Energy Systems are building infrastructure to capture this methane at the wellhead and use the otherwise wasted gas to produce Bitcoin. This means oil producers can achieve a 24-fold reduction in emissions in the Make sure of a comparison with the discharge of this methane into the atmosphere. “