Hi,
After the comments of Elon Musk, a recent report from Galaxy Digital proved him totally wrong: it is the traditional banking industry that consumes more energ.
The report, titled On Bitcoin's Energy Consumption: A Quantitative Approach to a Subjective Question, is summarized below.
The report was issued by Rachel Rybarczyk, Drew Armstrong & Amanda Fabio.
During every Bitcoin bull market, including the one we're in now, certain individuals have re-energized the debate about Bitcoin's energy consumption. Yet, the energy consumption is exactly the price for the network's robustness and security. Those who despise Bitcoin are engaging in critique, but without comparing the industry against the banking industry or for example the gold industry.
So what is Bitcoin's energy footprint and how does it compare to the traditional banking and gold industries?
The Bitcoin network's energy consumption has 3 sources:
- Bitcoin nodes validate and relay transactions;
- Mining pools coordinate miner's activity across the world;
- Mining machines.
The mining machines, called ASIC's consume about 99.8% of Bitcoin's energy consumption, and drive Bitcoin's Proof of Work (Pow) Consensus.
Let's compare the current annual Bitcoin energy consumption of roughly 113,9 TWh/yr with some other numbers:
- Total global annual energy supply: 166,071 TWh/yr or 1,458.2x of Bitcoin;
- Total global annual electricity production: 26,730 TWh/yr or 234.7x of Bitcoin;
- Total lost electricity due to transmission and distribution gaps: 2,205 TWh/yr or 19.4x of Bitcoin;
- Total energy footprint of always on American households energy loss: 1,375 KWh/yr or 12.1x of Bitcoin;
- Total energy footprint of banking system: 263.72 TWh/yr or 2,3x of Bitcoin;
- Total energy footprint of gold industry: 240.61 TWh/yr or 2.0x of Bitcoin.
This leads to the conclusion that Bitcoin doesn't use that much energy at all when comparing to its incumbents: the banking and gold industries. (The methodology of the audit can be found in the original article - banking industry comprised of banking data centers, bank branches, ATMs and card network's data centers - gold industry energy impact based upon World Gold Council's report titled Gold and Climate Change: Current and Future Impacts)
