Contrary to popular belief, the effects of banking and gold on the environment are much greater than those portrayed in mainstream media. Despite Bitcoin’s widespread attention regarding its environmental impact, it is not widely understood. The majority of arguments in favor of Bitcoin are based on the comparison between its electricity use and that of other countries. Critics can not separate the two terms.
In fact, over a billion people do not have access to the electrical grid, but they still have access to energy through physical fuels such as oil and gas. Bitcoin miners are not dependent on the grid, and they are using flared methane to mine the cryptocurrency. Out of the 160 terawatts of energy produced each year globally, around 50,000 terawatt-hours are wasted due to inefficient use. Electrical grids generate only 25,000 terawatt-hours of this energy. Bitcoin consumes around 120 terawatt-hours of this energy, which is less than 0.5% of the world’s grid electricity.
Although Bitcoin’s energy consumption is relatively insignificant, it does not take into account the environmental impact of other industries. For instance, how does the gold industry end? There are also questions about the electricity costs of gold dealers and jewelers. It also includes the various components of the banking system, such as the buildings used to process money, the plastic used to make notes, and the metal used to make coins and cards. On the other hand, does it include the money printing and pursuit of profit at all costs?
How do we classify the amount of money that can be printed out of thin air to be used for mass murder? The concept of energy use and pollution has been a dangerous one. In response, companies such as Dell are now using 100% recycled gold in their products. This technology is said to be at least 99% more eco-friendly than traditional mining methods.
Gold recycling is considered cleaner than mining due to the use of less water and the creation of fewer mountains of waste rock. However, it devours a lot of electricity to process the metal. It is also laughable to think that recycling is dirtier than mining due to the amount of CO2 that’s emitted. Gold Recycling is a grid-dependent process that occurs when the energy grid gets cleaner. As the grid gets cleaner, gold recycling will become emission-free.
It is expected that Bitcoin’s energy consumption will go beyond infinity in the long term. Its environmental effect should trend to be zero.
Although we have already explained why these are misleading, we will also provide an analysis of the numbers that are actually presented.
Banking
In 2014, experts calculated that the energy used by the country’s banking system was 660 terawatt-hours. This included the various activities of its branches and ATMs. Without too much work, we can easily assume that the annual increase in energy consumption will be around 1% to 2%. It would result in around 700 terawatt-hours of energy being consumed and around 400 Mt of CO2 being produced.
Gold
Gold.org noted that the amount of gold mined in 2020 was around 3,500 tons. Each kilogram of gold used around 48.6 megawatt-hours of energy. However, due to data limitations, the organization did not include the energy required to refine the gold in its calculations.
According to the study, the amount of CO2 that is released into the atmosphere by jewelry production should be around 35 tons, which is about 50% of the world’s gold demand. It is also assumed that the amount of power used to refine gold is equivalent to the amount of energy that’s used to mine it. Each kilogram of gold that is recycled uses about 31.3 MWh of electricity.
The gold mining industry is expected to use approximately 265 terawatt-hours of energy in 2020 and 145 Mt of CO2 through the use of 1750 tons of jewelry.
Bitcoin
We are very comfortable using the CBEI methodology, as it mirrors mine from 2014 to 2018. It is similar to mine in terms of its methodology. According to the Center for Bitcoin and Cash Innovation, Bitcoin uses over 113 terawatt-hours of energy a year. The amount of renewable energy is unknown, but it is expected that miners will continue to seek the lowest power available.
In the next decade, Bitcoin is expected to run on most renewable energy sources and stranded waste. Bitcoin mining is known to emit around 70 million tons of CO2 annually. The current global average electricity grid figure is around 0.6 tons of CO2.
Since the scope of the comparison is only limited by Bitcoin’s emissions and energy use, we can conclude that the digital currency consumes less energy and emissions than the gold mining industry.