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As Bitcoin and blockchain gain momentum at the corporate level, Galaxy Digital has released a report on Bitcoin energy consumption. The report describes how the network consumes less energy than traditional financial industries and its value.
The report comes days after Tesla CEO Elon Musk, the most significant vocal fan of cryptocurrencies on social media, banned bitcoin as a form of payment for Tesla products.
He blamed the use of fossil fuel for bitcoin mining and transactions. The ban came just under four months after Musk declared bitcoin can buy Tesla vehicles and various products.
The Galaxy Digital analysis uses various calculations to determine the amount of energy the Bitcoin network uses. It further describes how it is different from the banking and gold industries.
The authors agree that mining and using digital coins is undoubtedly energy-intensive, and Bitcoin is no different. They assert that this is what secures the network and makes it so robust. The value that Bitcoin brings can justify it to some degree.
Galaxy Digital’s analysis notes that value is subjective and that the mainstream public is still on the fence about Bitcoin’s utility.
The authors also point out that the energy usage criticisms are not usually directed to traditional industries. It lauds Bitcoin for being transparent, while incumbent companies are opaque and are not open concerning their energy footprint.
Cathie Wood of ARK Investment Management recently said that the bitcoin ecosystem consumes less than 10% of the energy compared to the energy consumption of the traditional banking system. It’s also crucial to understand that the banking system is quite extensive and serves billions of people.
According to Galaxy Digital’s calculation, the annual electricity consumption of Bitcoin is about 113.89 TWh/yr. In a particular viewpoint, the energy consumption of always-on devices in the US is about 1,375 TWh/yr — 12.1 times that of Bitcoin’s consumption.
Comparing Bitcoin with Gold and Banking
The consumption of gold and banking industries is difficult to estimate because of a lack of data on energy usage. This makes it difficult to “have a transparent conversation” about Bitcoin’s energy usage.
The analysts checked at all of the processes involved in the gold industry. They Multiplied 100,408,508 tCo2 total emissions with the global IEA carbon intensity multiplier estimates the total energy consumption of the gold industry is about 240.61 TWh/yr.
The banking industry is considered more difficult to gauge since it does not directly report electricity consumption data. However, Galaxy Digital takes banking data centers, bank branches, card network data centers, and ATMs.
The classification of sources of power consumption, the banking industry’s energy consumption estimate is 238.92 TWh/year. This figure is 2.3 times that of Bitcoin.
Galaxy Digital’s report considers the arguments presented by detractors, those who see it as complementary to incumbent systems, and ardent advocates. The company informs them that Bitcoin can bring forth financial inclusion and families in economically and politically turbulent territories.