Energy consumption Bitcoin vs Banking System

Update September 2021: NYT, Globally, estimates of Bitcoin’s use of […]

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Climate State

Date Posted:

January 15, 2018

Update September 2021: NYT, Globally, estimates of Bitcoin’s use of renewables range from about 40 percent to almost 75 percent. But in general, experts say, using renewable energy to power Bitcoin mining means it won’t be available to power a home, a factory or an electric car.

Update May 2021: Notice that the figures cited in this article are no longer accurate, since 2018 the amount of electricity usage for running bitcoin hardware in order to mine new bitcoin has increased much more, and with no end in sight. The bitcoin energy usage, is now cited as a reason for companies to withdraw their Bitcoin support.

Related: Electricity Drive: Bitcoin Down Almost 50%

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The highest estimates for Bitcoins annual terawatt hours consumption is 28.67. This means, more than 3 times more efficient than a very conservative calculation of the cost of the global banking system.

Carlos Domingo estimated banks electricity consumption.

Estimates for how many banks are in the world range from around 14600 to 25000, or even more than 60000. In this comparison (30,000 banks) I will just include three values: server costs, branches costs and ATM costs. Of course, banks (and its employees), consume a lot more electricity from other sources.

How many servers is each bank using to run their banking infrastructure? To pick a very conservative number, on average 100 servers per bank, for banking infrastructure, internal operations, accounting systems, website. If a server in average consumes 400Wh and since it always on, this means that banks consume in total 800 Megawatt hours.

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Now we calculate the electricity consumption of bank branches. According to the World Bank there are 12.5 branches per 100,000 adults in the world so if the world population is 7.6 billion people and we have around 70% adults, this means a total of 665000 branches.

Calculating branch consumption is more tricky since there are lots of things to take into account like size of the branch or number of employees as well as several things consuming electricity like lights, cooling, computers, monitors, etc. And they are not open all the time, for a conservative number 10 kilowatt hours per branch assuming an average branch has 10 light bulbs,
two air conditioning units that only run 20% of the time and 12 desktop computers running an average of 12 hours a day, 20 days a month through the year.

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There were about 3 million ATMs worldwide in 2015. For small bank ATM machines, the average daily power consumption comes around 5 Watt hours. So total consumption for banks during a year for all those three metrics is around 26 terawatt hours on servers, 58 terawatt hours on branches and 13 terawatt hours on ATMs, for a total of close to a 100 terawatt hours a year.

The highest estimates for Bitcoins annual terawatt hours consumption is 28.67. This means, more than 3 times more efficient than a very conservative calculation of the cost of the global banking system.

And then we need to factor in the energy consumption of card readers and credit cards, data centers to make transactions. One 2014 study estimated that data centers consume 10% of the global energy consumption alone. Hence, there are a lot more variables to consider when comparing cryptocurrency with other forms of financial transactions, and also the fact that many bitcoin miners use renewable energy.

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2 Comments

  1. Diogo Pereira Lopes November 7, 2018 at 10:34 pm - Reply

    You need to divide the total consumption vs number of transactions done. And I am pretty sure that the total number of transactions that the whole banking system does every year is many orders of magnitude bigger than the number of transactions in bitcoin.

  2. Anton December 29, 2018 at 4:47 am - Reply

    You say that the highest estimate for Bitcoin annual energy consumption is 28.67, yet if you view the total hash rate over the past year and assume everyone was only running the S9, we’d be using just over 30TWh. That’s an absolute MINIMUM.

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