Gold mining also uses up to twice the amount of energy of the bitcoin version, says the report, which was published by cryptocurrency investment firm Galaxy Digital.
The white paper study from the Galaxy Digital Mining team comes after Elon Musk fueled a debate on the energy consumption of bitcoin mining and announced that Tesla would no longer take it as payment for its electric vehicles.
Billionaire former hedge-fund manager Mike Novogratz is the CEO of Galaxy Digital, which made public all of its calculations.
The authors of the study estimate the energy consumption of the entire bitcoin network at 113.89 terawatts per hour, of which 99 per cent comes from the mining computers.
Bitcoin mining is the process of solving complex mathematical puzzles to verify bitcoin transactions and record them in the blockchain ledger.
This figure is lower than the University of Cambridge’s Centre for Alternative Finance, which estimated it at 128 terawatts per hour in March 2021.
The CAF has estimated that the bitcoin industry as a whole now uses as much energy each year as a country the size of Malaysia.
The Galaxy Digital study claims that, by their calculations, bitcoin’s energy consumption is less than half that of the traditional banking system, which it estimates at 263.72 terawatts per hour, and gold mining’s 240.61 terawatts per hour.
The study admitted that “gauging the energy use of these two industries is not as easy as auditing bitcoin” and stated that their study was a “good faith effort to estimate the energy footprint of both the gold industry and banking system.”
The study stated that “the banking industry does not directly report electricity consumption data.”
And it says it made its banking calculation based on Galaxy’s estimations of power usage by banking data centers, bank branches, ATMs and card networks’ data centers.
To calculate the energy consumption of the gold industry, Galaxy Digital Mining says it used estimates for the industry’s total greenhouse gases emissions provided in the World Gold Council’s report titled “Gold and climate change: Current and future impacts.”
Social media critics were quick to point out that both the gold mining and banking industries are both significantly larger than bitcoin, yet only use twice as much energy according to the study.
Galaxy Digital responded to that criticism by saying that bitcoin’s energy consumption was not linked to its “transactional volume or throughput.”
Crytocurrency markets lost an estimated $500bn following Mr Musk’s Tesla announcement.