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Energy consumption: Bitcoin mining vs Financial banking system

The boomers switched from; BTC is used for illegal purposes, to; BTC takes way to much energy to mine. Its a global disaster.

What these boomers forget to mention is (probably any argument at all), how does this reflect on the current system;

**BTC Mining energy;**

There arent hard numbers that says how much energy BTC mining consunes and i have a feeling a lot of FUD is been spreading.

Digiconomist.net stats show the BTC network captures 77.78 TWh, while CBECI indicates the network is 111.08 TWh. That is a 44% difference in attempting to estimate the consumption of the crypto asset’s network. Yet, these are the most leveraged sources used by bitcoin naysayers who say BTC’s electrical consumption is a ‘waste’ without any shame.

https://preview.redd.it/aszd7xf5bkk61.jpg?width=1280&format=pjpg&auto=webp&s=5541774f6d4a2bd184e02296b81613411978176f

The lowerbound of CBECI data is annualized on 19 january 2021. Its being said that this is the more accurate data of the network power and this would be **39.32 TWh**

Zodya did a [research](https://medium.com/@zodhyatech/do-bitcoins-consume-more-electricity-than-our-country-3cc354a6c191) in 2017 and found a widely-used formula to calculate the energy consumption of bitcoins.

**This** formula takes total mining revenues as the starting point. Then, it estimates the total operational costs for miners which are taken as a percentage of the miner revenue. The total operating costs which is calculated is converted into energy consumption using average electricity prices.

It is estimated that Bitcoin current annual electricity consumption is **32.56 (TWh**). Since this calculation uses some estimations and assumptions, we cannot be sure of its accuracy. But it does tell you the approximate energy consumption of Bitcoin.

There are [countless rebuttals](https://www.coindesk.com/the-last-word-on-bitcoins-energy-consumption) and [data points](https://twitter.com/danheld/status/1351235131214802945) that show people complaining about Bitcoin’s energy consumption are overreacting.

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https://preview.redd.it/cqr21vc7ikk61.jpg?width=1076&format=pjpg&auto=webp&s=d1753a8639eadb4e028a340ae2e57f981ba9fdc8

**Renewable energy sources**

Its being said that 70% of the crypto miners use a renewable energy source to power facilities. There is also abundant [efforts](https://news.bitcoin.com/genesis-mining-is-converting-excess-bitcoin-datacenter-heat-into-greenhouse-power-in-sweden/) dedicated to [energy cogeneration](https://news.bitcoin.com/south-florida-distillers-bitcoin/) as well.

The 2020 third Global Cryptoasset Benchmarking Study by the University of Cambridge also indicates that 76% of digital currency miners use renewable power sources. Backing up this data is a report from Deutsche Bank Research, the Chinese National Energy Agency, Morgan Stanley, and Coinshares. The report from these four organizations highlights that “78% of Bitcoin’s electricity usage is from renewables.”

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https://preview.redd.it/m0a0sf0jckk61.jpg?width=696&format=pjpg&auto=webp&s=bc8d90f1c8acc6d7954e8ab815e28f773c915cc4

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**Current financial banking system**

The boomers and media mostly forget to mention our current banking system. here is a great number of articles and statistics that indicate the current banking system uses [well over 140 TWh a year](https://medium.com/@zodhyatech/which-consumes-more-power-banks-or-bitcoins-8302750fe2bc). This is assumption [source](https://medium.com/@zodhyatech/which-consumes-more-power-banks-or-bitcoins-8302750fe2bc):

1. **Server costs,**

100 servers per bank, If a server in average consumes 400Wh and since it always on, this means that banks consume in total 800 Mwh.

**2. Branches cost**

According to the World Bank, there are 12.5 branches per 100,000 adults in the world. As the world population is 7.6 billion and we have around 70% adults, this means a total of 665,000 branches. Only in the US, they appear to be close to 100,000 branches and assuming the US is around 15% or less of the entire banking system worldwide you get to around the same number.

Calculating a branch’s consumption turns out to be tricky since there are lots of things to take into account like the size of the branch or number of employees as well as several things consuming electricity like lights, cooling, computers, etc. And they are not open 24 x 365. So after studying some case-studies, I have decided to settle for a conservative number 15 kWh per branch assuming an average branch has 10 light bulbs, two air conditioning units that are used 40% of the time and 12 desktop computers running an average of 12 hours a day, 20 days a month through the year.

**3. ATM Cost**

There are also 3 million ATMs throughout the world. For an ATM with 2 air conditioners and lighting, the average daily power consumption comes around 48 kWh.

So total consumption for banks during a year only on those three metrics is around 26 TWh on servers, 87 TWh on branches and 26TWh on ATMs for a total of close to a **140 TWh a year.**

[source](https://medium.com/@zodhyatech/which-consumes-more-power-banks-or-bitcoins-8302750fe2bc)

**Conclusion**

This would mean that BTC uses 1/4 in comparrison to the current financial system.

Even tho, this past October, the researchers Yo-Der Song and Tomaso Aste, published a report which highlights that the cost of bitcoin mining “has never really increased.” In this [paper](https://www.frontiersin.org/articles/10.3389/fbloc.2020.565497/full). When BTC will be adopted world wide, there will be more transactions.

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**Edit:** I see it became quite bit of a discussion. Good!!! Lets talk about it and learn from it, even if you agree or dissagree.



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18 Comments

  1. > This would mean that BTC uses 1/4 in comparrison to the current financial system.

    But you only take into account the mining, mining alone doesn’t allow BTC to fully replace the existing banking system. You still need exchanges, wallets etc. The energy usage is probably still lower, but then again BTC isn’t widely adopted as much as the current banking system is. It’s an interesting perspective for sure but saying BTC uses 1/4 is not fair at all.

  2. Also heard people say the cost of charging devices to exchange cryptocurrency but it’s no different than charging your device for general use.

    Also online banking and transfer apps are also a thing. Just people pulling at straws.

  3. I find it most scary how much energy gold mining swallows.

    That and the fact it is destroying natural habitats directly via deforestation, and the by-product pollution it causes is huge.

  4. Many misunderstandings here. The estimated energy use is very conservative, the small estimate assumes hashrate is generated with modern equipment, we know by the fact that even buying a used S9 is difficult, that tens of thousands of s9s are currently hashing, that makes the energy use much much higher in reality.

    A large number of miners use renewable energy as a PORTION of their energy mix, not their entire supply. Miners are primarily fossil fuel based, as that is the cheapest year round baseload electricity.

    All this while safer, cleaner, more efficient cryptocurrency alternatives exist, just a few mouseclicks away…

  5. When people have their safety (banks and fiat) challenged, they will try to nitpick the threat (crypto) and find every possible way to destroy it.

    We’re still flawed apes after all.

  6. I feel dumber for having read this.

    **First you choose to take the numbers that are heavily in your favour. Both in energy usage and in energy source.**

    Fair enough, I’ll gloss over it because it’s irrelevant. Bitcoin is so inefficient, even if you were to take the lowest estimate and then half that again, it still doesn’t make a difference.

    **You are comparing an entire industry vs. a single currency.**

    Can Bitcoin give out loans? Mortgages, business loans? Does Bitcoin offer you cards you can use to pay in stores? Does Bitcoin offer you an online banking portal? No. Because it’s a currency. That’s all it is.

    All of the things you tallied up that use electricity in the banking system. They are services that Bitcoin does not offer.

    The US Dollar or Euro also cannot do these things. Because they are currency, like Bitcoin.

    Bitcoin can’t do any of it. Sure, somebody might offer these services, like ATMs or Cards you can use to pay with Bitcoin but that’s not part of the currency itself.

    **Bitcoin is designed to be as inefficient as possible. It’s extremely easy to understand aswell.**

    The block reward miners get can be turned into money. The equation is:

    Profit = Block reward – Costs.

    The costs consist of: Hardware costs (miners), infrastructure but most importantly: electricity.

    So to simplify, let’s just say:

    Profit = Income – Electricity cost.

    As long as that equation turns you a profit, you are incentivised to further expand your mining operation, up to the point where you do not turn a profit anymore.

    Electricity costs are fairly stable across the board. So if the Income is 50’000 and electricity costs are 50’000, we’re looking at a ratio of 1:1. Even if you expand your mining operation, you will not increase your profit.

    If the income now goes up = Bitcoin’s price goes up, the ratio changes. Now if the price rises by 20% and your income is 60’000 for every 50’000 spend on electricity, it makes sense to expand. The ratio is 1:1.2. So for every 1k$ you spend on electricity, you get 1.2k$ in Bitcoin.

    As a result, Bitcoin’s price and electricity consumed by mining go hand in hand. What this means in essence is: You are turning electricity into money. The more electricity you use, the more money you make. Does this seem like a good idea to you?

    Getting back to your thesis, that Bitcoin isn’t that big of a deal because banking uses more electricity. Let’s assume Bitcoin goes up more and more. If Bitcoin becomes as big as the US Dollar, it’s price would have to go up by a factor of almost 40.

    Since electricity consumed by BTC is directly tied to it’s price, electricity usage would also go up by a factor of 40.

    So now, even using a very generous estimate from your post at 40TWh currently, that turns into 1600 TWh.

    So now, Bitcoin uses more than 10x more energy than the banking sector (according to your calculation, I didn’t look at it – I don’t care, it’s just the baseline you gave). But still, does it offer loans? Does it have ATMs? Does it have branches? No. It’s still only a currency.

    1600 TWh is 1’600’000 GWh.

    Here’s a list of electricity consumption by Country in GWh:

    https://en.wikipedia.org/wiki/List_of_countries_by_electricity_consumption

    As you can see, that would put Bitcoin above India. So a currency, that does nothing else other than exist and facilitating transactions – would use more electricity than 1.35 billion people. As an aside: We’re also kind of in a bind to solve the whole climate crisis.

    Keep in mind, we are still using an estimate that is **HEAVILY** in your favour.

    If we were to use the higher estimate at 110 TWh, the same increase in price would put Bitcoin at 4’400’000 GWh after a 40x increase in price.

    Looking at our list of countries again, Bitcoin now uses more electricity than the entirety of the US.

    In addition to the electricity costs, who actually benefits? Currently, an average of 900 Bitcoins are mined each day, each single Bitcoin costing 50’000$. So every day, that’s 45 million USD for miners.

    Because of economics of scale, we have seen a massive shift from people mining at home to massive mining operations. As an individual, you cannot compete with big operations. They can move to where electricity is cheap, move to cold places to save on cooling expenses, they can optimize their infrastructure. You can’t.

    According to statista (https://www.statista.com/statistics/1200477/bitcoin-mining-by-country/), 65% of all mining is done in China with massive players such as Bitmain (https://en.wikipedia.org/wiki/Bitmain).

    This trend of centralisation will undoubtedly continue. So in the end, all Bitcoin does it pay very few individuals a ton of money to burn electricity.

    So not only is it damaging to the environment, it also just pays very few, big operations a ton of money.

    So as a conclusion: What’s going to happen? Bitcoin will do well probably but if you seriously believe it will become the world’s currency then you are delusional. Bitcoin will get regulated and I can definitely see mining become prohibited or receiving payments in Bitcoin become prohibited. It will crash and burn in the future. Maybe not now or in the next few years but it will.

    Even shorter: Bitcoin is retarded.

  7. So btc uses 1/4 in comparison to our current financial system but handles a tiny percentage of the transaction and thats a good thing??

    Im not a btc hater, but thats not a good thing when we have far greener cryptos like nano

  8. The fact that this post starts off with “boomers” already makes me not take it serious.

    Btc has an energy problem. No matter how much energy other systems use, btc uses a lot for what it does. Whether you you should care or not is your own choice to make. Doesn’t take away it uses loads of energy per transaction.

  9. I stopped reading because you used the term ‘boomers’, didn’t even read past the first one. If you’re going to do thought out analysis keep your idiotic terms out of it. Its data, it speaks for itself. If you need to use derogatory terms then your data is being portrayed with a skewed opinion and is worthless as your analysis is given doubt.
    If you worked for me id fire you.

    In short, grow up and drop the chip off your shoulder.

  10. **Bitcoin(BTC) Basic Info:** [Website](https://bitcoin.org) – r/Bitcoin – [Abstract](https://www.reddit.com/r/CryptoWikis/wiki/Bitcoin_basicinfo#wiki_short_description) – [History](https://www.reddit.com/r/CryptoWikis/wiki/Bitcoin_basicinfo#wiki_history) – [Exchanges](https://www.reddit.com/r/CryptoWikis/wiki/Bitcoin_basicinfo#wiki_exchanges) – [Wallets](https://www.reddit.com/r/CryptoWikis/wiki/Bitcoin_basicinfo#wiki_wallets)

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  11. Gold mining is even more insane with it destroying whole forests and mountains. Imagine if you needed to ruin an entire ecosystem for some shiny rocks.

    BTC mining still needs some resource wasting to operate, after all, graphics cards are made from various kinds of minerals, but in no way shape or form it can reach the amount of buttfucking gold mining does to nature.

  12. This is great mate, thanks for taking the time to write it up! Maybe you should send this to all the FUD sayers like the BBC who continuously post shit about crypto energy!

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