Bitcoin Uses Far Less Energy Than Traditional Banking
Over the last couple of years, bitcoin has evolved from an abstruse digital token used by a small group of people into a store of value and a mode of payment. Millions of people now believe this to be the currency of the future. Due to its increased usage, it has gotten a lot of backlashes from critics and environmentalists. Their main argument is that the programming used to settle transactions is trampling all over ecological ideals with its massive carbon footprint.
For instance, research from Cambridge University indicates that bitcoin miners are expected to consume roughly 130 Terawatt-hours of energy. This is approximately 0.6% of global electricity consumption. Alex De Vries, a Paris-based economist, estimated that at the start of 2021, bitcoin alone generated more e-waste than in many midsize countries.
Charles Hoskinson, the co-founder of Cardano, stated that bitcoin’s carbon footprint would get exponentially worse because the more its price rises, the more competition there is for the currency and thus the more energy it consumes.
An Argument for Bitcoin Energy Use
A recently published peer-reviewed research report calls the environmental-focused bluster against Bitcoin into question. A report published by Michel Khazzak calculates that bitcoin payments are more efficient than the legacy financial system. What’s more, is that the banking sector uses 56 times more energy than bitcoin. A 27-page white paper published by Payment Consultancy firm Valuechain asserts that past energy analysis of bitcoin were inaccurate and unfairly biased against crypto.
A new report by Galaxy Digital asserts that, despite bitcoin’s enormous carbon footprint, it currently uses half the energy required for global finances. Their white paper also stated that the gold and financial system’s energy data lacks transparency, meaning that many were unaware of the difference in energy demand between those systems and the more transparent bitcoin.
Needless to say, it’s essential to compare Bitcoin energy consumption with all the aspects of the classical monetary payment system. Surprisingly enough, treasuries worldwide spend much money to maintain their currencies. The cost of capital on a global scale uses energy resources. These totals easily exceed the cost of mining bitcoin and even today’s cost.
Bottom Line
A cryptocurrency system is more energy efficient than the traditional banking system. As Bitcoin use and adoption grow, we expect to see further innovations to improve efficiency and new benefits for the currency. If more of humanity’s wealth is transferred into Bitcoin over time, as many expect, then Bitcoin mining will undoubtedly need to keep up with demand.
But is this energy consumption sustainable in the long run? Indeed, improvements can always be made to any technological process. But all in all, cryptocurrency is set to transform the financial industry for good and will likely continue to innovate and expand its uses for many years to come.
Image Source: Adobe Stock
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
DNACrypto Team
Cryptocurrency & Blockchain Experts
