The explosion in cryptocurrency mining over the past year has prompted an onslaught of environmental concerns, due to the industry’s heavy energy usage and carbon footprint. However, according to new research, the traditional banking system as well as the gold industry may actaully be responsible for significantly more energy consumption.
According to research by cryptocurrency firm Galaxy Digital, which was originally founded by former hedge fund manager Michael Novogratz, the annual energy consumption of bitcoin mining totals 113.89 terawatt-hours (TWh), including miner power consumption, energy for miner demand, pool power consumption, and node power consumption. However, despite the significant figure, it is still two times lower than the total energy used by the banking system, which sits at an annual 263.72 TWh globally.
Galaxy Digital noted that bitcoin’s energy consumption is significantly easier to track in real time, especially with resources such as the Cambridge Bitcoin Electricity Consumption Index. Evaluating energy usage of the traditional financial system and gold industry, on the other hand, is undoubtedly more difficult to quantify. Galaxy’s mining arm derived its estimates by compiling statistics from banking data centers, ATMs, bank branches, as well as card networks’ data centers.
The banking industry does not directly report electricity consumption data,” the report explained, explaining that the commercial and retail banking system consists of numerous settlement layers, whereas the bitcoin network is only comprised of a final settlement.
Galaxy also determined the energy consumption of the gold industry by analyzing estimates of total greenhouse gas emissions published by the Wold Gold Council. According to the firm’s research, the gold industry uses approximately 240.61 TWh each year. “These estimates may exclude key sources of energy use and emissions that are second order effects of the gold industry like the energy and carbon intensity of the tires used in gold mines,” Galaxy noted.
Information for this briefing was found via Galaxy Digital. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.