[2017-10-16] Dutch Bank Complains About How Much Electricity Bitcoin Uses

[Terraformer]

Dutch Bank ING released a report complaining about the energy amount that the average Bitcoin transaction consumes.

When it comes to Bitcoin, some people just aren’t happy unless they’re finding something to complain about. The fact that it’s essentially a revolution in finance and individual liberty isn’t important. What is important is what they consider the drawbacks of Bitcoin to be. The most recent example comes from the Dutch bank ING, who just released a report complaining about the high energy cost associated with every Bitcoin transaction.

Leaving All the Lights On in the House

The report from Dutch bank ING looks at the energy consumption of the average Bitcoin transaction from several angles. On one hand, they note that the use of a tremendous amount of electricity makes fraudulent transactions costly by keeping the verification of trades expensive. This high cost does serve as a deterrent to those who would seek to cause mischief.

ING senior economist Teunis Brosens says:

    "By making sure that verifying transactions is a costly business, the integrity of the network can be preserved as long as benevolent nodes control a majority of computing power. Together, they will dominate the verification (mining) process. To make the verification (mining) costly, the verification algorithm requires a lot of processing power and thus electricity."

Brosens goes on to discuss how much energy is used in a Bitcoin transaction. He says that it takes 200kWh for every Bitcoin transaction, which is higher than the 37kWh for Ethereum. Of course, this is far higher than the 0.01kWh for a credit card transaction, say Visa. Brosens adds:

    "This number needs some context. 200kWh is enough to run over 200 washing cycles. In fact, it’s enough to run my entire home over four weeks, which consumes about 45 kWh per week costing €39 of electricity (at current Dutch consumer prices)."

The Ongoing Energy Debate

A cynical person might note that Brosens may be pointing out the vast energy cost difference between Bitcoin and credit card transactions due to the fact that banks, such as ING, have a vested interest in promoting credit cards over cryptocurrencies. I’m pretty sure banks are not thrilled with the lack of centralized control associated with Bitcoin and other digital currencies.

However, it is true that Bitcoin transactions require a lot of energy, and there are many articles where people really dig into the math. It also appears that the energy consumption is increasing over time, even for the less taxing Ethereum. Yet is such energy consumption the end of the world? Are we doomed to live out our lives in a Mad Max future where we barter for water and precious juice with Bitcoin? While probably pretty cool, the answer is no. The amount of energy produced grows every year as more power plants come online and older plants become more efficient.

This really isn’t a zero-sum game or else the rise of server farms would have ushered in an age of calamity. There’s actually excess energy to be found, such as the case in Russia where power companies are selling off their excess energy to miners at a cheaper rate. In the end, such complaints are just another tirade against Bitcoin as it represents a massive shift from the old status quo and the powers that be are not happy with that.

https://bitcoinist.com/dutch-bank-complains-about-how-much-electricity-bitcoin-uses/

[aso118]

If bitcoin manages to put the banks out of business, we will be saving a lot more energy. In any case, I don’t understand the purpose of this rant. Governments are not going to shut down bitcoin because it consumes too much electricity.

[The_Dark_Knight]

If bitcoin manages to put the banks out of business, we will be saving a lot more energy. In any case, I don’t understand the purpose of this rant. Governments are not going to shut down bitcoin because it consumes too much electricity.

They are not going to ban bitcoin because of this, but be prepared for the rain of critics of people that love to save the planet, they will argue that bitcoin is not green enough and are going to start boycotting it with that excuse, I think it is coming and it may even be possible that lobbying groups will be able to ban bitcoin mining in some countries where the environmentalists are very powerful.

[laurenB7742]

I wonder how did they calculate that number 200 kWh for just one bitcoin transaction. I think this is overestimated.
Also how can one transaction consume $40 worth of electricity, if transfer fee is 0.0002 to 0.001 BTC ($1 to $5). This doesn't make sense because no one would be mining if their costs were 10 times higher than reward.

[Variogam]

I wonder how did they calculate that number 200 kWh for just one bitcoin transaction. I think this is overestimated.
Also how can one transaction consume $40 worth of electricity, if transfer fee is 0.0002 to 0.001 BTC ($1 to $5). This doesn't make sense because no one would be mining if their costs were 10 times higher than reward.

The fees making about 1 BTC every block, but the subsidy is 12.5 BTC for a total of about 13.5 BTC.

So for 13.5 BTC or about 75.000 USD, on average 1800 transactions are included, so indeed about 40 USD per Bitcoin transaction.

[Kakmakr]

What an incredible stupid argument!

What is the true cost of the Credit card transactions? Let's add the hidden cost not mentioned in this article. Credit card companies have physical "Brick n Mortar" business premises and these buildings consume large amounts of electricity for cooling and lifts and heating and lights etc.. etc.. < This is conveniently not added to the cost per transaction for these Credit card transactions >

Even cash use more electricity and energy to manufacture the coins and to keep them safe and to transport them to the different locations and in the end to destroy or to recycle them.

Compare Apples with Apples you idiot bankers!!!

[buwaytress]

What an incredible stupid argument!

What is the true cost of the Credit card transactions? Let's add the hidden cost not mentioned in this article. Credit card companies have physical "Brick n Mortar" business premises and these buildings consume large amounts of electricity for cooling and lifts and heating and lights etc.. etc.. < This is conveniently not added to the cost per transaction for these Credit card transactions >

Even cash use more electricity and energy to manufacture the coins and to keep them safe and to transport them to the different locations and in the end to destroy or to recycle them.

Compare Apples with Apples you idiot bankers!!!

Comparisons are extremely tricky so they have to acknowledge that!

Yeah, would be great if some of their R&D people actually took in true costs of transaction. There are just so many variables to take into account simply by comparing a centralised network (let's say Visa) to a decentralised one (let's say Bitcoin). If you only look at the common overheads of equipment and network infrastructure (basically, electricity and maintenance), then Bitcoin doesn't have any costs left. The banks, on the other hand, have other permanent overheads: employee salaries, costs of software (Bitcoin is free and open sourced!).

I suspect Bitcoin's cost of tx is very high, that is true. But the benefits, especially as it scales, far outweigh the costs of something like Visa, which has many points of failure. Bitcoin has also outgrown its simple use of being a digital currency and they need to take that into account.

[European Central Bank]

i think they're right. it is a disgusting waste of power. but because it's such a huge draw then miners are incentivized to find those over supplied areas which often means chinese hydro plants pumping out electricity to no one. geo thermal is also super cheap.

if bitcoin got really big it might be a significant driver in the refinement of renewables to the point where it won't matter at all how much electricity is being burnt.

[The_Dark_Knight]

What an incredible stupid argument!

What is the true cost of the Credit card transactions? Let's add the hidden cost not mentioned in this article. Credit card companies have physical "Brick n Mortar" business premises and these buildings consume large amounts of electricity for cooling and lifts and heating and lights etc.. etc.. < This is conveniently not added to the cost per transaction for these Credit card transactions >

Even cash use more electricity and energy to manufacture the coins and to keep them safe and to transport them to the different locations and in the end to destroy or to recycle them.

Compare Apples with Apples you idiot bankers!!!

But we know they are not going to do that, they are trying to present their concerns as if they are just expressing their honest concerns when we know very well they are trying to find excuses to not adopt bitcoin, and as I said in my previous post I think there are people dumb enough to buy the premise and we may face a campaign trying to stop bitcoin adoption as an effort to save the planet.