Bitcoin And Mining Are Energy Efficient Alternatives

Bitcoin critics have addressed the topic by comparing the energy utilization of bitcoin to the energy consumption of countries. Vice published an article in March 2016 that illustrated how environmental investigators forecast that Bitcoin, by 2020, could absorb as much electricity as Denmark. In July of this year, The Verge published a post comparing Bitcoin's energy consumption to the energy use of Switzerland. A comparison to VISA can also be one that is frequently made, asserting that the price per bitcoin transaction is significantly higher. It is hard to deny that bitcoin mining and therefore the Bitcoin network absorbs a significant amount of energy, but are we making the right comparisons and having the right discussions?

You likely get my point, comparing Bitcoins energy consumption to the energy intake of nations does not make a whole lot of sense and doesn't tell us that much. Likewise, the comparison to VISA trades is one we ought to make with caution.

In order to earn a suitable comparison, it can be of interest to consider what Bitcoin aims to replace. The idea behind free bitcoin mining pool isn't only to be digital money, but also to function as a decentralized system, setting it compared to the greatly centralized banking system we utilize for our fiat currencies. So, a better comparison is to asses Bitcoin's energy consumption as compared with the energy intake of the banking system.

Usually, these studies concentrate on aspects like network size, throughput, volume, and capitalization. Though a few of these articles or studies include energy consumption and provide their quotes, they usually agree on the fact that the energy consumption of standard payment methods is hard to estimate.

So, let's talk about why it is hard to estimate the energy consumption of a conventional payment system and therefore difficult to compare this type of payment method to the Bitcoin system in terms of energy consumption. Bitcoin was made to be a complete currency program, so technically can't be compared to let's say VISA. VISA, MasterCard and American Express, for example, are payment suppliers and rely on other parties for the solutions they provide. Even if we consider all of the third parties VISA works with, including VISA itself, we still would not have a full currency system which would signify a legitimate comparison to Bitcoin.

Obviously, coping with all the entities and processes that have energy, estimating the energy consumption of conventional full currency systems is complex, to say the very least. An article from Hackernoon considers three aspects: server costs, branch costs, and ATM costs. Interesting to point out is that this post left out quite a few operational costs and for example energy consumption linked to employees (imagine if you'd think about energy consumption and carbon footprint of employee commutes). Nevertheless, despite a limited extent, the article concludes that conventional banking consumes tree times the power of the Bitcoin network at the time the post was printed.