Over the years, Bitcoin has been a subject of comparison over the conventional means of transacting and storing money.
The banking system and gold have been compared to Bitcoin in terms of efficiency and their growing appetite for energy, which has led to a back and forth argument from supporters and opponents of this growing innovation.
A report published by nasdaq.com recently defined Bitcoin’s energy use to be less than half of what the gold industry uses and less than one-fifth of that of the banking economy.
Due to this lofty comparison, many anti-bitcoin maxis have argued in disagreement with this comparison, stating that it should not be a metric for comparison without factoring in the efficiency of these systems alongside their energy use comparison.
The Banks are giants of the financial industry. They facilitate payment and ensure deposit and other monetary transactions are simple and practical between individuals, institutions, organizations, and governments.
They are so large that the market capitalization of the top ten banks globally is estimated at USD 2trillion. While it is difficult to estimate the true energy consumption of this mighty system, many reports have been established that try to estimate this and establish a comparison.
Source: Nasdaq estimate
Bitcoin is a digital asset and the first successful cryptocurrency, created by Satoshi Nakamoto (Pseudonym) with the primary aim of replacing the current financial systems.
A handful of merchants accept Bitcoin and users, pegging its market capitalization at $889.35B.
Unlike the Banking system, it’s not difficult to estimate Bitcoin energy consumption. As of the time of the publication of this writing, the energy allocation to all of Bitcoin’s mining operations annually is estimated to be 121.54TWh.
Heightened concerns about Bitcoin’s energy consumption and its negative environmental influence.
Earlier this year, Elon Musk, the doge father, has publicly denounced bitcoin adoption as transactional currency for his Tesla vehicles. His reason was supposed to be because of Bitcoin’s thirst and hunger for fossil fuels to power and sustain its mining operations, leading to different environmental concerns.
This has since then sparked a lot of outrages online, some in support of this narrative while others in clear disagreement. Since then, bitcoin adoption and its increased energy consumption have been controversial.
Several people want Bitcoin to adopt the proof of stake consensus model, which uses other methods from energy output to secure transactions carried out on its system.
Other known names have also called out the networking giants regarding their enormous energy use.
Proof of Work secures the Bitcoin network by preventing abuses. It requires the service requester to complete a task, typically requiring processing time by the requesting computer. This is the logic behind mining operations; after completing the work or task, the service requesters get Bitcoin as the reward.
Several fears that increased Bitcoin adoption will linearly lead to higher electricity need for securing its network
Reports of how Bitcoin allows for a greener, renewable and clean energy for its Mining Operations.
Proponents of Bitcoin technology have published several reports, such as the coin desk and the spectator. They aim to educate people on how Bitcoin can allow for greener energy usage in contrast to what the majority believe.
They argued that a civilization’s ability to harness energy is one of the primary measurements of its advancement. The recent Bitcoin documentary- This Machine Greens mentioned energy as one of the ways humans transform the basic state of things to a hospitable one. The ingenuity that came with energy production brought about modern life, so it’s difficult to disagree with this report.
Using a great deal of energy is in itself not a crime. The cruise ship industry uses 250Twhr a year, more than twice the Bitcoin network’s energy. American households, devices altogether use an estimated 1375Twhr, 12.1 times that of Bitcoin’s consumption, expended for having household devices respond instantly rather than after a few.
Bitcoin miners need to find low-cost energy to get an edge, which translates to efficient, clean energy. The way incentives work with miners, they have a direct incentive to find the cheapest energy available, and in many cases, the cheapest energy are renewables. Energy sources like wind, solar, hydrothermal, use of flared natural gases like methane has been the major sources of energy for mining operations in the last decades.
Energy scientists found out that more than two-thirds of the energy produced in the world is waste energy because they are produced during hours of the day when there is no demand to consume it or simply because there are not enough resources to move them from locations where they are originally produced to where they are needed.
Bitcoin using all the country’s energy may be technically true, but that is not the full story. A lot of the energy Bitcoin network is consuming is waste energy that otherwise would not have been available to be consumed.
Renewables already account for 39% of Bitcoin’s network Energy use, a number that is increasing all the time against a general renewable energy use of 11%. Cheap power is cheap because it is efficient. It is efficient because there is less waste in turning it into a useful form, and less waste means less carbon, less pollution, and fewer negative externalities- This Machine Green- Bitcoin Documentary
Like shells and gold, Bitcoin uses energy to establish value, unlike other forms of money. Bitcoin’s demand for the most efficient power pushes miners to innovate, obtaining wasted power like flared methane, trapped energy, like remote volcanoes, or simply efficient and therefore clean.