If you google search "how much power is used by online banking" there are multiple analyses answering this question for you along with consumption estimates for Bitcoin. One pro-bitcoin one from my first 4 results attempts to estimate all the power consumption for every bank server, branch office, and ATM 24/7 around the entire globe and produces an estimate of 140TWh/yr vs bitcoin's (at the time) 32.56 TWh/yr estimate. You can compare their average transaction values for yourself to decide how favorable this comparison actually is for bitcoin.
An article I read today provides a comparison point for realtime transaction processing, Fedwire, along with its transaction volumes and server count. It's interesting to compare that with Bitcoin's volumes. The article also makes claims about the energy consumption (suggesting FAANG's energy consumption is already dwarfed by Bitcoin) but I can't manually verify those myself: https://www.ofnumbers.com/2021/02/14/bitcoin-and-other-pow-c...
The above article estimates a best case total of 55.1 TWh/year for the major Proof of Work chains, and also provides estimates for various types of mining equipment, etc.
There have been previous threads on HN with some back-of-the-envelope comparisons of Bitcoin's energy consumption vs the global banking systems, e.g. https://news.ycombinator.com/item?id=18325430 . If these rough calculations are correct, the global banking system uses ~100TWh/year (including datacentres, branches, heating in offices etc.) while Bitcoin is around one-third of that at ~30TWh/year for a negligible percentage of the total number of transactions, and a single Visa transaction (again factoring in datacentres etc.) is 41Wh per transaction whereas a single Bitcoin trasaction is around 20,000 more at ~826kWh. That was also 5 months ago, so the situation is likely to have got worse for Bitcoin, given the traditional banking system is incentivised to reduce energy consumption whereas Bitcoin is explicitly designed to increase energy consumption over time.
Much less? Bitcoin currently powers almost none of the world’s transactions, yet consumes all that energy.
The entire us consumes 75 twh in a year, the same as bitcoin’s global energy use.
Of that, the entire commercial sector is about 12 twh. That’s not just banks. That’s every company. Banks alone are surely far less. Maybe 2-3 twh? And the us is 15% of global gdp. So, global finance might consume about 14-32 twh.
Again, that is while doing all of global finance. Bitcoin powers a rounding error of transactions yet consumes 75 twh.
There’s just no comparison energy wise. My math could be off by several orders of magnitude and bitcoin would still consume more if it were actually powering the world’s transactions.
This first-google-result analysis[0] from a couple years ago puts the global banking system at around 100 TWh a year which is pretty close to the currently estimated "121.36TWh" for bitcoin[1].
Incidentally, that 2nd article mentions that this is equivalent to the power used by inactive-but-on electronic devices in US households alone.
I guess PC gaming was at 75TWh 5 years ago [2], so I'm not going to worry too much yet.
Let's take an article [0] produced by a big Bitcoin miner at face value. They claim the banking system consumes 263.72 TWh globally, twice the power consumption of the Bitcoin network at that time, 113.89 TWh.
Now, Bitcoin is processing 4.6 transactions/second [1]. VISA alone is processing 1700 transactions/second on average, with peak transaction rates claimed in the 24000/second [2]. Mastercard is similar, as are other payment processors.
Even worse, the claimed energy usage is for the entire banking system. This easily amounts to billions of daily transactions, but also many other services that Bitcoin doesn't even come close to offering: insurance, mortgages, credits, risk evaluations, escrow and many others. All this for a mere 2x the total energy expenditure.
You are comparing (baseline US power use/person x number of people working at banks) to (power consumed to do the computations to operate the bitcoin blockchain).
I fail to see how this is relevant to the question of how bitcoin compares to the banking system as a system for storing and transferring money from an energy perspective.
The relevant comparison would be to compare the costs of doing a similar volume of similar operations using bitcoin and the bank system.
Best estimates are that Bitcoin consumes a ton of power, more than Ireland or Israel at this point. Current estimates, and estimating this stuff is very hard, but the range we're looking at is in the 56-73TWh per year.
Handily enough, we know exactly how much electricity Visa used in 2017, and it's about 0.19TWh[0]. Now obviously Visa alone isn't the end of the financial system, bank branches, payment processors, and other actors are involved. Personally, I highly doubt that they add up to another 55-72TWh, but if you can prove that, be my guest.
Of course, at this point we're also missing a very important factor: transaction volume. Comparing financial systems in terms of total energy usage is very misleading, a far better way is to measure energy per transaction. And this is the point where it really falls apart for Bitcoin. As of today, bitcoin is averaging about 180,000 transactions a day. That's about 100 seconds of Visa's average volume[1].
Comparing fees is a terrible way to measure transaction cost in terms of kWh. First of all, Stripe and Paypal employ a lot of people, and people are quite expensive. Second, bitcoin miners are being compensated by the expected rewards of finding a block (or participating in a pool that finds one). This means that the transaction fee and the amount of electricity used simply may not be related at all, since the fee might drop below the electricity cost so long as the expected reward is bigger still.
The Bitcoin network hashrate is currently at ~3,800,000,000 GH/s. The most efficient miners are at ~0.1W/GH. So the Bitcoin network, at its most efficient, would be using 380,000,000 Watts right now.
That article says that office buildings use ~1.53 Watts per square foot to cool the building (that's an average 1.53 throughout the year). So the power used to secure the Bitcoin network is equal to cooling ~248 million square feet of office space. Sounds like a lot, but pulling up a random office building, 55 Water Street, and I see it's 3.5 million square feet.
The U.S. as a whole uses 446,689,497,716 Watts on average. So Bitcoin is using 0.085% of the total U.S. power consumption. Or, 0.015% of world power consumption.
I have no idea if what we are currently spending on the Bitcoin network, in terms of natural resources, is more or less efficient than our current banking system. But those are the numbers.
Personally, I don't think any of its relevant. Reducing energy consumption should not be the primary focus of our species. We should focus on increasing sustainable energy _production_. Energy production is a core attribute of our economy and our civilization. It may even be the _most_ important thing to us, as a growing species. Obviously reducing waste when we can is good, but I'd rather expend the majority of our resources building out solar installations rather than quibbling about whether Bitcoin is power efficient or not.
Estimated energy consumption - 46TWh [0]. Average transaction rate seems lower than 4/s at all times so let's use 4 [1]. That makes 126M/year.
Visa process 111B transactions per year [2] and mastercard 65B [3] for a total of 176B.
If those transactions alone were as energy expensive, then that would account for about 64,000 TWh.
Global energy consumption (all kinds) is about 110,000 TWh
For traditional banking to be more expensive in energy per transaction, it would seem to need to account for more than about 60% of all energy used if all banking were only these card payment services and nothing else.
Appreciate any checking of figures or calculations, though unless there's something very wrong the rough outcome should be the same given that I've only included a slice of transactions.
Regarding 1, I haven't seen comparisons to the overall energy consumption of the banking sector, but a lot of people have talked about the per-transaction energy of bitcoin vs other kinds of transactions, and the ratio is pretty crazy. I don't think banking is "particularly energy-efficient", but there's not a lot of reason for it to be especially energy intensive. The information surrounding accounts/transactions/portfolios etc is all pretty concise.
That is a completely useless comparison. If anything, compare energy usage per transaction. If you would hypothetically scale up the transaction volume of the Bitcoin network to the entire USD financial system, you'd quickly find out that it would use more energy than was ever produced on this planet.
That figure sounds outrageous. I had to check for myself.
According to an IEEE article[0], bitcoin's power usage is at around 1 Gigawatt. In 2012, Wikipedia[1] tells me that the global electricity usage was around 20,000 Terawatt hours, which makes an average power of around 2,000 Gigawatts. We can assume this has increased somewhat since then - the growth rates suggest annual consumption would be a few thousand Terawatt hours greater by now.
So the 2012 figures give us around 0.05% of electricity consumption being used by bitcoin. While this runs a little shy of your figure, and current values may be somewhat lower still, I'm really surprised at just how power intensive the whole endeavour is.
What's interesting to me, on a human level, is the way people in the BC World keep moving the goalpost, one day they are greener because the total absolute power consumption is lower (regardless of users - I remember when in 2019 BC consumed more energy than Switzerland), then when it's not better in absolute anymore, BC is greener because is powered by renewables, like renewables were only available to BC miners, now that BC power consumption is going up (and fast) and banking is going down (slowly) it's ok, because it's the price to pay for freedom and everybody should be happy, even though they don't care about bitcoins etc. etc.
for comparison, even the high-end estimates of bitcoin’s total current power consumption are still less than 6 percent of the power consumed by the world’s banking sector.
Indeed, congratulations Bitcoin. You are able to process 2.3 transactions per second using only 6 percent of the power of the entire worldwide banking sector!
* VISA: 2,000 transactions per second
* ACH: 800 transactions per second
* MasterCard: 3,000 transactions per second (?)
* NYSE: Who even knows?
* Etc...
There was an article[0] which estimated that the entire global banking system (down to lamps on desks in offices) used 100Twh a year, whereas Bitcoin used around 30Twh a year (for a relatively insignificant volume of transactions). I don't know how accurate that is, but despite the unfavourable statistics, the article was still from some pro-Bitcoin person concluding that we should "stop complaining about Bitcoin and start complaining about Xmas lights". Also note that Bitcoin's energy use has since risen to 110Twh a year[1].
# kilowatt-hours per transaction
# https://motherboard.vice.com/en_us/article/ywbbpm/bitcoin-mining-electricity-consumption-ethereum-energy-climate-change
btc = 215
# Transactions per day
tpd = 3e5
# convert btu to terawatt-hours
# http://www.dvirc.org/how-much-energy-does-an-office-building-consume/
officeEnergyPerYear = 1.4e9*.293071/10^12
# https://www.usatoday.com/story/money/business/2014/10/05/24-7-wall-st-banks-with-most-branches/16648133/
nBankBranchUS = 94725
# Convert to kw-h to tw-h
btcEnergyPerYear = btc*tpd*365/10^9
> btcEnergyPerYear/(officeEnergyPerYear*nBankBranchUS)
[1] 0.6057412
I have no idea if the source numbers are correct, but this is a better statistic. Mining uses the same amount of energy as used for ~58k average office buildings. So the worldwide bitcoin mining energy consumption is about half of that currently used for banks only in the US. This is assuming banks are "average" (probably higher due to security concerns) and of course that banking doesn't consume energy in any other way.
Has anyone actually tried doing one of these comparisons yet? I mean going beyond just back of the napkin? Can we get estimates so about whether credit cards consume more electricity than many countries? Without that this type of article falls flat. Actually it is interesting that it is so easy to estimate the total energy consumption in this case.
"Comparing Bitcoin’s energy consumption to other payment systems
To put the energy consumed by the Bitcoin network into perspective we can compare it to another payment system like VISA for example. Even though the available information on VISA’s energy consumption is limited, we can establish that the data centers that process VISA’s transactions consume energy equal to that of 50,000 U.S. households. We also know VISA processed 82.3 billion transactions in 2016. With the help of these numbers, it is possible to compare both networks and show that Bitcoin is extremely more energy intensive per transaction than VISA."
1. I have read that with every VISA transaction, transactions move between no less than 5 separate institutions. What is the net energy used in all of that deliberate inefficiency? All buildings, vehicles, and energy use of people who work for VISA must also be taken into account. And for all other credit cards and payment systems.
2. Bitcoin isn't really a "payment system", so comparing it to VISA is apples to oranges. It is more of a store of value, like a bank. So it would more properly be compared to the net electricity consumption of all banks, including all buildings, armoured trucks and all vehicles used to ship people to and from banks around the world.
An article I read today provides a comparison point for realtime transaction processing, Fedwire, along with its transaction volumes and server count. It's interesting to compare that with Bitcoin's volumes. The article also makes claims about the energy consumption (suggesting FAANG's energy consumption is already dwarfed by Bitcoin) but I can't manually verify those myself: https://www.ofnumbers.com/2021/02/14/bitcoin-and-other-pow-c...
The above article estimates a best case total of 55.1 TWh/year for the major Proof of Work chains, and also provides estimates for various types of mining equipment, etc.
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