June 23, 2021

Bitcoin vs Banks: Which Consumes an Incredible Amount of Electricity?

Everyone's heard of China embarking on a fight against mining. One of the reasons is farms that consume electricity like there's no tomorrow. The tightening of the country authorities' policy towards mining does not come as a surprise. This isn't the first time when cryptocurrency is criticized. Numerous Governments talk about digital gold energy efficiency. They use statements like “Bitcoin consumes more energy per year than the Netherlands”, “That's enough to power the University of Cambridge for 704 years” for their argument. Nevertheless, no one ever questions the traditional financial system. According to the Galaxy Digital report, the annual energy consumption of BTC is 114 TWh, while the banking industry uses more than 260 TWh annually. What is the reason for these double standards? Let's try to figure it out today.

Dispelling the Myths

It is clear to all that Bitcoin does not appear out of thin air. We remind you that the mining takes place thanks to special equipment, which costs a lot of money and needs a great deal of electricity. However, it never occurs to critics that this energy is necessary to the maintenance of security and stability of the network. Miners help users make transfers with minimal headaches and keep their funds safe and sound. The more miners engaged in the process, the safer the network. But at the same time, due to the increase in the price of virtual assets and profitability, the popularity of mining is gaining momentum every year. 

Environmentalists are sounding the alarm: the number of crypto farms is growing. The eternal quest for decentralized trust may turn into a real ecological disaster. Bitcoin had to put up with criticism for the high consumption of electricity for a long time. The only problem is the rate of digital cash is not sky-high, because the world banking system uses 2 times more electricity. The Galaxy Digital study is living proof of that.

Combining data from 100 leading banking data centers, bank branches, ATMs, and card payment networks, the experts got the 260 TWh / year number. What is more, in the case of BTC, the information is transparent and easily tracked in real-time. When it comes to the banking sector, it is not used to publishing statistics on the total electricity consumption. Discover more about the inadequacies of the industry in our article.

Bottom Line

Many governments aren't shy about the dislike for the high-yielding alternative asset class. They often refer to "facts" about the energy consumption associated with mining. Well, they have no choice because the authorities see the most popular cryptocurrency as a threat to traditional financial institutions. Despite this, there are no reliable studies that would calculate the carbon footprint of the bitcoin mining process. So all these reproaches are nothing more than the right distraction. In addition, professor Katrina Kelly-Pitou of the University of Pittsburgh believes that by increasing the use of blockchain by more than 100 times, the digital space will account for 2% of the world's energy consumption. 

P.s. Who will challenge China for Mining Superpower? The answer is here.

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