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The banking industry uses 56 times more energy than bitcoin mining – News

The latest data on Bitcoin’s power consumption, efficiency and scalability compared to the banking sector puts the world’s largest cryptocurrency in a new light.
AT research reportpublished by Michel Khazzaka, an IT engineer, cryptographer and consultant, estimates that Bitcoin payments are “a million times more efficient” than the outdated “traditional” financial system. In addition, the banking sector “uses 56 times more energy than Bitcoin.”
The report brings together nearly four years of research and proposes a new calculation to estimate Bitcoin’s Proof-of-Work power consumption. In an interview, Hazzaka told Cointelegraph:

“Bitcoin Lightning and Bitcoin in general are really great and very effective technological solutions that deserve to be adopted on a large scale. This invention is ingenious enough, efficient and powerful enough to be widely adopted.”

Hazzaka, who founded payment consultancy Valuechain in late 2021, offers an alternative to the energy estimates provided by the Cambridge Bitcoin Electricity Consumption Index (CBECI). The index, often cited by various publications, estimates that Bitcoin consumes approximately 122 TWh per year.

Taking into account the average lifetime of cryptocurrency mining machines, as well as the rate at which new IT materials are created, Hazzaka suggests that Bitcoin consumes 88.95 TWh per year, well below the Cambridge estimate.
A payments specialist who wrote a dissertation on cryptocurrencies in 2003 and introduced Bitcoin to the general public in 2011, Hazzaka is also studying the banking sector under a microscope to effectively compare the two monetary systems. Hazzaka opined that he “really underestimates every aspect of the banking sector” and, contrary to critics, his report is “biased towards the banking system”.
However, taking into account the creation of money, the transport of money, the consumption of energy by the physical banking infrastructure, etc., he comes up with a figure of 4,981 TWh. A total of 5,000 TWh is consumed by the “classic payments” sector each year. Therefore, banking uses 56 times more energy than Bitcoin.
The report looks at transaction efficiency, which shows that “today, at the current block size and assuming blocks are filled to their maximum capacity, ηmax = 5.7 times better than in the classical system.” However, this does not include the Lightning Network. In an interview, Hazzaka explained:

“Lightning will allow the Bitcoin protocol to perform more transactions without consuming more power. And that’s magic.”

The report concludes that the combination of Bitcoin and the Lightning Network allows Bitcoin to become “194 million” times more energy efficient than a classical payment system.

The Hazzaki report also states that “the banking and payments industry should adopt blockchain and possibly even Bitcoin.” While Hazzaka’s withdrawal may come as a surprise to decentralization and freedom advocates in the crypto community, Hazzaka believes that Bitcoin can actually benefit banking:

“If they [приверженцы «классической» финансовой системы] will be brave enough to implement blockchain technologies in their systems, this will increase their efficiency and scalability.”

Although bitcoin’s power consumption is often criticized, the results of a deeper investigation of the banking sector (if it happens) will come as a surprise.

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