Analysing Bitcoin’s Proof of Work & the Lightning Network reveals that the banking system is energy-hungry, which means that Bitcoin is better for the environment.
New figures about Bitcoin’s ( BTC) energy use, efficiency, and scalability help to expose the banking industry while presenting the largest cryptocurrency in the world in a new light.
Michel Khazzaka, an IT consultant and IT engineer, published a report claiming that Bitcoin payments are “millions of times more efficient than” the legacy financial system. The Banking sector uses 56 times as much energy as Bitcoin.
This report compiles nearly four years of research. It also proposes a new calculation to estimate Bitcoin’s Proof of Work energy consumption. Khazzaka spoke to Cointelegraph in an interview:
“Bitcoin Lightning and Bitcoin in general are great technological solutions that should be adopted on large scale.” This invention is powerful enough to be adopted by mass.
Khazzaka, who established Valuechain payments consulting in late 2021 proposes an alternative energy estimate to those provided by the Cambridge Bitcoin Electricity Consumption Index. Cointelegraph cites the index which estimates that Bitcoin consumes approximately 122 TW/H each year.
Khazzaka estimates that Bitcoin consumes 88.95 trillion watts per year, which is significantly less than Cambridge’s estimation.
Khazzaka, a payments specialist, wrote his dissertation on cryptography in 2003 and discovered Bitcoin in 2011. Khazzaka also examines the banking sector to compare the two monetary systems. Khazzaka stated to Cointelegraph that he underestimated every aspect of the bank sector and, contrary to critics’ claims, his report was biased towards the banking system.
However, when you take into account all aspects of creating money, transporting money and energy consumption in physical banking infrastructure, the total amount of 4,981 trillion watts is reached. The “classical payments sector” consumes 5,000 TWh every year. Banks use 56 times as much energy as Bitcoin.
The report analyzes transaction efficiency and shows that it is “Today at current block sizes and if they are filled to their maximum capacities emax = 5.7x higher energy efficiency than the classic system.” Khazzaka also explained that:
“Lightning will enable the bitcoin protocol to perform more transactions without using more energy.” This is magic strong>
According to the report, Bitcoin and the Lightning Network can combine to make Bitcoin “194 million times more efficient than a traditional payment system.
Khazzaka says the report shows that banks and financial institutions need to adopt blockchain technology and possibly even Bitcoin.
“If they’re brave enough to embrace blockchain technology, it can improve their efficiency as well as their scalability.”
While Bitcoin’s energy consumption is often criticized, many will welcome the investigation into the banking industry.