[2018-08-23] Banks Consume Over Three Times More Energy than Bitcoin, Research

[ivanpoldark]

Bitcoin’s network energy consumption has become somewhat of a hot topic as the cryptocurrency grows in popularity. A clean energy researcher, however, says that naysayers are missing critical factors when making their claims.

HAVING THE WRONG CONVERSATION

According to Katrina Kelly-Pitou, the popular debate on whether or not Bitcoin’s network electricity consumption is causing serious damage to our climate is not headed in the right direction. Kelly-Pitou is a clean energy technology researcher at the University of Pittsburg,

Citing recent studies, which suggest Bitcoin dramatically increases the consumption of electricity on a global scale, Kelly-Pitou claims that experts are failing to understand some of the basics behind renewable energy systems:

Electricity production can increase while still maintaining a minimal impact on the environment. Rather than focusing on how much energy Bitcoin uses, the discussion should center around who indeed is producing it – and where their power comes from.

While she doesn’t neglect the substantial amount of electricity used for Bitcoin mining, she also notes that banking alone consumes “an estimated 100 terawatts.”

This is a little bit more than three times the energy Bitcoin mining consumes. She also makes an interesting claim, assuming 100x increase in Bitcoin’s current market size. Kelly-Pitou notes:

If Bitcoin technology were to mature by more than 100 times its current market size, it would still equal only 2 percent of all energy consumption.

Read more: https://bitcoinist.com/banks-consume-energy-bitcoin/

[1714311272]

1714311272

[Thekool1s]

If Bitcoin technology were to mature by more than 100 times its current market size, it would still equal only 2 percent of all energy consumption.

Exactly, These Fudsters need something better than "Bitcoin is causing the climate change!" It's not you dumbfucks! At least get your numbers right. More energy is being wasted around than what Bitcoin's network uses for the whole year.

On Average an American wastes around 283 KW of energy each month.

Multiply that by 12 months, that's 3396 KW of energy wasted for a year!

Let's take the least favourable figures and say only 50 million Americans waste this much energy all year round. That's around 169800000000 KW of energy wasted which translates into 169.8 TW of energy wasted each year! While Bitcoin's Network hardly uses 75 TW of energy for the whole year.

Anybody complaining about Bitcoin using too much Electricity or is causing the climate change needs to check up with a doc, Cuz Numbers don't lie hun!

[bbc.reporter]

But what is the argument? Should banks go away tomorrow because they waste more electricity than bitcoin? People should be careful in simplifying such observations because taking away the banks will have a much more negative economic and political impact on the world than taking away bitcoin.

[d5000]

While she doesn’t neglect the substantial amount of electricity used for Bitcoin mining, she also notes that banking alone consumes “an estimated 100 terawatts.” This is a little bit more than three times the energy Bitcoin mining consumes.

Well, but how many transactions does the banking system process? And Bitcoin?

That's of course not to defend banks. But to say there "is no problem", does not solve anything. If we continue to neglect, it will drive us directly to a scenario when Bitcoin mining is forbidden in almost every country because of its high electricity consumption, or alternatively: a high "mining tax" is charged which could drive transaction costs up, even with LN.

If Bitcoin technology were to mature by more than 100 times its current market size, it would still equal only 2 percent of all energy consumption.

2 percent of all energy or all electricity consumption? 2% of all energy consumption is not low at all, it would make up to 4-5% of all electricity consumption. I think the estimation is a bit low, too.

Electricity production can increase while still maintaining a minimal impact on the environment. Rather than focusing on how much energy Bitcoin uses, the discussion should center around who indeed is producing it – and where their power comes from.

Here, in contrast, she's totally right, and I think that's the clue how Bitcoin could be eco-friendly. Ideally miners should be powered 100% by renewables and - very important - with an own, independent infrastructure, to avoid influence in the electricity price.

Still there could be side-effects, for example, solar cells could become scarce because of Bitcoin mining factories, but that would likely be temporary effects and could lead even to scale effect benefitting the renewable energy industry.

[Kakmakr]

How are Bitcoin wasting electricity, if they are creating "money" in a more environmentally friendly way, than printing or minting money? You need paper pulp, cotton and linen for "paper" money and you need metals for coins. How much resources are used to manufacture that money and to destroy it, after a few years?

You have to transport it, store it physically and digitally and also circulate it and all of that use energy and electricity.   

Do you still think, Bitcoin use more electricity than traditional fiat currencies?

[Slow death]

[...]

It is not a good thing to be comparing banks and bitcoin, this will only provoke fights or unnecessary war, people will need banks to buy bitcoins, banks can also benefit from making deals with exchanges. That's why I see no reason to make comparisons of what is better, whether banks are better than bitcoin or whether and bitcoin better than banks. both are important. banks and bitcoin has its advantages and disadvantages. So let's use the two

People should be careful in simplifying such observations because taking away the banks will have a much more negative economic and political impact on the world than taking away bitcoin.

people do not think much about it and do not realize that banks will not end

[prehisto]

Electricity production can increase while still maintaining a minimal impact on the environment. Rather than focusing on how much energy Bitcoin uses, the discussion should center around who indeed is producing it – and where their power comes from.

Exactly! We constantly read about miners using renewable energy because in lot of cases it is the cheapest . Examples miners in Russia using hydro-power. Also I belive that a good part of mining enthusiasts are also tech driven and are installing solar panels as well.


Also I totally agree that this is important point about energy consumption and bitcoin, this is just a myth.
In order to calculate and compare FIAT system to BTC , we would have to include a ton of factors. Like what is the cost of energy and resources starting with costs of cultivating necessary plants to manufacture paper for paper money, the printing , the distribution and then again collecting the money an destroying it . Also the SWIFT network. The next step would be the VISA and MasterCard notworks how much do they consume. This is not an easy comparison. But one thing is sure , it is not even close to this stupid news going around that BTC will destroy the world because of environmental impact.

[1Referee]

In the end it doesn't even matter who uses whatever amount of energy. It's a nonsensical discussion that leads to nothing but a bunch of hypocrites sticking their nose in things that they don't have much of a clue about. Everyone consuming energy pays for it, and the energy suppliers will adjust themselves in all sorts of ways to meet demand in an as environmental friendly way as possible.

The internet as a whole has grown into one massive energy consuming monster, and did anyone experience the negative consequences of that? No, because the extra demand for energy will be met because there is enough capacity available without needing to stress the surrounding environment and economies. I would even like to say that it forces large energy consumers to generate their own energy by using natural elements that are near impossible to exhaust.

Bitcoin's energy consumption is not a problem, neither is the one of the banking system. Home users are the real wasters.

[guybrushthreepwood]

But what is the argument? Should banks go away tomorrow because they waste more electricity than bitcoin? People should be careful in simplifying such observations because taking away the banks will have a much more negative economic and political impact on the world than taking away bitcoin.

That isn't the argument. The argument is a response to the criticism that bitcoin 'is a waste of electricity'.

I think it's a crying shame that most people haven't already gone to solar energy for everything never mind just bitcoin mining. We rely far too much on fossil fuels and every household should have a solar generator on their roof and I'm surprised they aren't already more popular. Not only will they often cover your entire electricity costs some people even make money from them as their unused energy can go back into grid. You can build eco houses these days for very little that cost absolutely nothing to run. Get an electric car like a Tesla or whatever and you can even get free travel. People should be building purposely built solar energy mining farms if they haven't already, but I'm sure they will become more prevalent especially with rising energy costs along with eco-worries.

How are Bitcoin wasting electricity, if they are creating "money" in a more environmentally friendly way, than printing or minting money? You need paper pulp, cotton and linen for "paper" money and you need metals for coins. How much resources are used to manufacture that money and to destroy it, after a few years?

You have to transport it, store it physically and digitally and also circulate it and all of that use energy and electricity.  

Do you still think, Bitcoin use more electricity than traditional fiat currencies?

It would be interesting to factor in how much energy and resources are spent and wasted in printing more money and destroying old banknotes and coins as well.

[d5000]

I think it's a crying shame that most people haven't already gone to solar energy for everything never mind just bitcoin mining. We rely far too much on fossil fuels and every household should have a solar generator on their roof and I'm surprised they aren't already more popular.

I agree, but I think it's simply a bit expensive still for most Average Joes. While banks in many countries are giving you loans for solar panels if it's already profitable there (e.g. most EU countries), you often are expected to pay approximately half of the costs yourself. Not everybody can afford to pay $2000 to 3000 (a small system is around $5-6K), even if after 5-8 years you get it back.

The mining industry, in contrast, should be able to afford that. The problem is that the big miners often are using "the cheapest of the cheapest" electricity, e.g. power near a carbon power plant in northern China, and with these costs the solar mining costs are simply not competitive enough.

However, I expect that to change in the coming years. Chinese electricity cost was averaging 8-9 ct/kWh in 2017, so a miner in the cheapest jurisdiction could maybe get 5-6 ct. Solar power in Germany, which isn't exactly a sunny country but has a highly developed and cheap solar industry, are averaging similar amounts in the most sunny regions (according to a study from May 2018, some achieve as low as 0,037 €/kWh, or about 4,5 cents). In Mexico, a park is being constructed with 2 ct/kWh.

So we could actually be very soon presencing a "solar power revolution" in the mining industry.

[gentlemand]

Research like this is just pathetic cherry picking.

I would be rather more interested in the electricity consumed per user in which case the figures for BTC will look appalling. I expect that to get ironed out eventually and along the way it will drive innovation in consumption and renewables, but anyone who pretends the energy usage thing is anything other than gross is being disingenuous in the extreme. As it stands it's not a good look.

[hatshepsut93]

I think it's a crying shame that most people haven't already gone to solar energy for everything never mind just bitcoin mining. We rely far too much on fossil fuels and every household should have a solar generator on their roof and I'm surprised they aren't already more popular. Not only will they often cover your entire electricity costs some people even make money from them as their unused energy can go back into grid. You can build eco houses these days for very little that cost absolutely nothing to run. Get an electric car like a Tesla or whatever and you can even get free travel. People should be building purposely built solar energy mining farms if they haven't already, but I'm sure they will become more prevalent especially with rising energy costs along with eco-worries.

Solar energy is improving rapidly, but it's still expensive, and also has the highest carbon footprint among all green technologies. What really sucks is that some countries are closing their nuclear stations, because despite all the FUD, nuclear energy is quite clean and is very efficient.

Research like this is just pathetic cherry picking.

I would be rather more interested in the electricity consumed per user in which case the figures for BTC will look appalling. I expect that to get ironed out eventually and along the way it will drive innovation in consumption and renewables, but anyone who pretends the energy usage thing is anything other than gross is being disingenuous in the extreme. As it stands it's not a good look.

That's only because we are still in block reward phase so mining is crazy profitable, but as rewards keep halvening, miners will have to rely on transaction fees, so Bitcoin's energy consumption will be more dependent on the amount of Bitcoin users. Also we'll have Lightning, so one onchain transaction will represent thousands of LN transactions.

The world could have saved a lot of Bitcoin's electricity if Satoshi had premined all the coins, but then Bitcoin wouldn't be trustless and decentralized. But he still made it so a big portion of coins were mined in the early days. Imagine if the supply curve was linear or parabolic, the energy consumption would be much higher in those cases.

[bbc.reporter]

[...]

It is not a good thing to be comparing banks and bitcoin, this will only provoke fights or unnecessary war, people will need banks to buy bitcoins, banks can also benefit from making deals with exchanges. That's why I see no reason to make comparisons of what is better, whether banks are better than bitcoin or whether and bitcoin better than banks. both are important. banks and bitcoin has its advantages and disadvantages. So let's use the two

People should be careful in simplifying such observations because taking away the banks will have a much more negative economic and political impact on the world than taking away bitcoin.

people do not think much about it and do not realize that banks will not end

Agreed. That article might also be paid for by some bitcoin bagholders who are now very desperate to keep the price on $6000 and above hehehe.

[guybrushthreepwood]

I think it's a crying shame that most people haven't already gone to solar energy for everything never mind just bitcoin mining. We rely far too much on fossil fuels and every household should have a solar generator on their roof and I'm surprised they aren't already more popular.

I agree, but I think it's simply a bit expensive still for most Average Joes. While banks in many countries are giving you loans for solar panels if it's already profitable there (e.g. most EU countries), you often are expected to pay approximately half of the costs yourself. Not everybody can afford to pay $2000 to 3000 (a small system is around $5-6K), even if after 5-8 years you get it back.

The mining industry, in contrast, should be able to afford that. The problem is that the big miners often are using "the cheapest of the cheapest" electricity, e.g. power near a carbon power plant in northern China, and with these costs the solar mining costs are simply not competitive enough.

However, I expect that to change in the coming years. Chinese electricity cost was averaging 8-9 ct/kWh in 2017, so a miner in the cheapest jurisdiction could maybe get 5-6 ct. Solar power in Germany, which isn't exactly a sunny country but has a highly developed and cheap solar industry, are averaging similar amounts in the most sunny regions (according to a study from May 2018, some achieve as low as 0,037 €/kWh, or about 4,5 cents). In Mexico, a park is being constructed with 2 ct/kWh.

So we could actually be very soon presencing a "solar power revolution" in the mining industry.

Solar panels are expensive, but they pay for themselves within years. You can buy them on finance or take a loan and there are even companies in some countries that will give and install them for free, though they essentially collect the money instead and after x amount of years when they've made the value of them back plus installation costs and their profit they're then legally yours. Governments should also be subsiding them, just too bad most are in bed with the fossil fuel industry so they don't.

Solar energy is improving rapidly, but it's still expensive, and also has the highest carbon footprint among all green technologies.

Footprint for what? To create the panels? Regardless, once installed it's then free energy for life. We've got a huge ball of energy above us all day everyday and we can't afford not to utilize it. Solar panels are something every household can eventually have and you don't need to worry about energy for homes. One less thing to worry about. You've got to remember not everyone has the space for wind turbines or has a huge body of water in their back yard for hydro energy as well.

[buwaytress]

She's right in that we should be seeking the right direction of questioning. Of course energy consumption is a concern since this is a resource and one that could potentially have an impact but every single calculation has failed to take into consideration the actual benefit of securing the Bitcoin network. Every benefit has its cosk and risk associated. Is this cost-benefit good enough? I don't know, to be honest, but there isn't really a comparison. They compare to banks before but not as detailed as this research. I keep saying before that cost isn't just electricity but security, salaries, rents, licences. With Bitcoin the cost is perhaps "easier" to calculate but the structures of banks are so huge that even though they're processing and doing more than Bitcoin, their relative associated costs are much higher.

Should we shutter banks because they consume 3 x more energy than Bitcoin? Of course not, because their services are still valuable. So yeah, good direction. But we aren't quite there yet.

[aso118]

Bitcoin’s network energy consumption has become somewhat of a hot topic as the cryptocurrency grows in popularity. A clean energy researcher, however, says that naysayers are missing critical factors when making their claims.

HAVING THE WRONG CONVERSATION

According to Katrina Kelly-Pitou, the popular debate on whether or not Bitcoin’s network electricity consumption is causing serious damage to our climate is not headed in the right direction. Kelly-Pitou is a clean energy technology researcher at the University of Pittsburg,

Citing recent studies, which suggest Bitcoin dramatically increases the consumption of electricity on a global scale, Kelly-Pitou claims that experts are failing to understand some of the basics behind renewable energy systems:

Electricity production can increase while still maintaining a minimal impact on the environment. Rather than focusing on how much energy Bitcoin uses, the discussion should center around who indeed is producing it – and where their power comes from.

While she doesn’t neglect the substantial amount of electricity used for Bitcoin mining, she also notes that banking alone consumes “an estimated 100 terawatts.”

This is a little bit more than three times the energy Bitcoin mining consumes. She also makes an interesting claim, assuming 100x increase in Bitcoin’s current market size. Kelly-Pitou notes:

If Bitcoin technology were to mature by more than 100 times its current market size, it would still equal only 2 percent of all energy consumption.

Read more: https://bitcoinist.com/banks-consume-energy-bitcoin/

It is kind of misleading to compare the electricity consumption of the Bitcoin network to banks. Banks perform a function which is vastly greater than verify a ledger and update it. Banks facilitate trade transactions, provide credit, take deposits from customers... They are the backbone of today's financial network.

[d5000]

It is kind of misleading to compare the electricity consumption of the Bitcoin network to banks. Banks perform a function which is vastly greater than verify a ledger and update it. Banks facilitate trade transactions, provide credit, take deposits from customers... They are the backbone of today's financial network.

Well, Bitcoiners' dream (or crypto investor's dream) is that all these functions could also be provided by cryptocurrencies. Traditional loans are, however, a big challenge for cryptos; as this service includes to manage and analyze risks - I think that even if cryptocurrencies succeed to provide all major use cases of banks, some of them will continue to exist doing risk assessment and similar tasks.

However, with ICOs, and even DAOs (well, they should be better coded than the one we know ) cryptos provide alternatives to traditional loans. They are not the same thing, but they already replace loans in some use cases, e.g. financing of startups and new products.

[alex_gr_cc]

Banks are difficult to compare with bitcoin. They have completely different functional. And it is unlikely that banks will ever disappear. Even with the advent of cryptocurrency and the disappearance of fiat money (if such ever happens).

[darkangel11]

While she doesn’t neglect the substantial amount of electricity used for Bitcoin mining, she also notes that banking alone consumes “an estimated 100 terawatts.” This is a little bit more than three times the energy Bitcoin mining consumes.

Well, but how many transactions does the banking system process? And Bitcoin?

That's of course not to defend banks. But to say there "is no problem", does not solve anything. If we continue to neglect, it will drive us directly to a scenario when Bitcoin mining is forbidden in almost every country because of its high electricity consumption, or alternatively: a high "mining tax" is charged which could drive transaction costs up, even with LN.

But there literally is no problem!
If you really wanted to compare the fiat money industry to Bitcoin you would have to add everything that operates in this industry. Starting from companies that make bills (paper, ink, watermarks, microprint) through ATMs, and all processing terminals, all the way to the vaults and mainframes. If you add it all you'll have 10 times the consumption of BTC mining! If the world can handle the banks it can handle Bitcoin.

[d5000]

But there literally is no problem!

Still not. I hope also (as I already wrote) that market forces will bring miners to renewables relatively soon. But it could also be different. Coal-based electricity is very cheap, too.

If you really wanted to compare the fiat money industry to Bitcoin you would have to add everything that operates in this industry. Starting from companies that make bills (paper, ink, watermarks, microprint) through ATMs, and all processing terminals, all the way to the vaults and mainframes. If you add it all you'll have 10 times the consumption of BTC mining! If the world can handle the banks it can handle Bitcoin.

Well, printing isn't really an energy-consuming industry. ATMs should already have been included in the calculations of the article above.

Overall I agree with you that 10:1 between "the current banking/fiat industry" and "Bitcoin mining" could be a good estimate (the 3:1 ratio mentioned in the article may be based on the Digicoinomist index, which I think is overestimating mining consumption by about 2 times), with Bitcoin at $6000-7000. But my point is that in the future that could be very different, if Bitcoin sees prices of $100K and more, above all if that happens well before the next halving. Some people are dreaming to achieve that price in 2019 or 2020. Until then, I don't believe that the mining industry already will have advanced significantly with the shift to renewables if they only obey market forces.

What I think is that miners should think about taking active measures to make this shift to renewables happen faster. Once the shift happened, then there will be probably no problem anymore with mass adoption.