Does Cryptocurrency Mining Waste More Energy Than The Traditional Banking System?

Does Cryptocurrency Mining Waste More Energy Than The Traditional Banking System?

Apart from the constant speculation regarding the valuation of Bitcoin and talk of the “bubble” bursting, cryptocurrency has seen a lot of press recently for consuming excessive energy as a result of its mining processes. Particularly, extreme criticism came from Business Insider last November, who claimed that the electricity used to mine bitcoin in 2017 was “bigger than the annual usage of 159 countries”, a misleading statement in itself as the article goes on to cite that consumption for all Bitcoin mining was great than that of each of these countries individually. Was this lesser assertion, however, even true?

Business Insider pointed to and their use of the stats from Bitcoin and cryptocurrency data provider Digiconomist to draw a conclusion that Ireland and most African countries use less electricity every year than the amount used to process Bitcoin transactions. This completely ignores the important fact that cryptocurrency mining is either illegal or unregulated in so many places and, as a result, there is no reliable data on how much electricity the process consumes and power companies’ statistics cannot account accurately for this mining.

At the end of 2017, the total global energy consumption was estimated to be 158,714,610 GWh by the International Energy Agency, meaning Bitcoin’s annual usage of 9,636 GWh accounted for roughly a 16,000th of the global supply. Is this shockingly high or surprisingly low? This rather depends on how you paint the picture. You could assert that this figure means cryptocurrency mining consumes as much energy as the Democratic Republic of Congo or enough to power 6 aircraft carriers but, then again, you could also point the the fact that Google used double this amount of energy in 2015. That’s just one company versus an entire industry.

Cryptocurrency miners tend to use electricity that is as cheap as possible out of necessity to make their operations profitable and, therefore, consume it mostly in areas where there is a plentiful supply and it cannot be transported or stored. This rules out exorbitant consumption of fossil fuels because transporting oil, gas and coal is easier than moving hydrogen dams, wind turbines and other renewable energy sources. Jared Tate, the founder of DigiByte, says that “miners are performing a service, securing the Blockchain in a very direct manner as they validate transactions”. Distributing DigiByte across 5 mining algorithms has lead to lots of home mining, however, and Jared points to DigiByte miners “opting to source their power from renewable sources” and “a revival of rightfully concerned citizens now ensuring they power their entire home from renewable power vendors as a direct result of their mining”. Cryptocurrency miners are obviously only willing to consume electricity if they profit on it and, if prices stay at roughly their current level, the mining industry will continue to grow. That said, it is not likely they will turn to fossil fuels as these resources are fast becoming exhausted and the transportation of them to areas where prices are more expensive is globally prevalent.

The traditional banking system consumes resources far beyond simple electricity to run servers. Printing cash in the UK, for example, involves the slaughter of animals and cotton farming. Banks house themselves in massive and often luxurious skyscrapers consuming vast quantities of electricity on air-conditioning and heating, and frequently using private jets to fly executives and important clients around the world. There are approximately 43,000 banks in the world, each one with servers, branch offices, and ATMs, all using energy. Given the fact that cryptocurrency mining leans towards the use of renewable energy, it could, in fact, actually be an environmentally friendly alternative to our current financial system.

Tom Cridland is a sustainable fashion designer, musician and entrepreneur.

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