Analysis of Bitcoin’s proof-of-work and the Lightning Network exposes the industry as energy-hungry, demonstrating that Bitcoin is better for the planet.
Fresh figures on Bitcoin’s (BTC) energy consumption, potency and scalability serve to show the banking sector whereas bathing the world's largest cryptocurrency in a new light.
A research report revealed by Michel Khazzaka, an IT engineer, cryptanalyst and adviser, calculates that Bitcoin payments are a "million times additional efficient" than the gift financial system. Plus, the banking sector “uses 56 times more energy than Bitcoin.”
The report compiles nearly four years of analysis and suggests a brand new calculation for estimating Bitcoin's proof-of-work energy consumption. In an interview, Khazzaka told Cointelegraph:
“Bitcoin Lightning, and Bitcoin, in general, are really great and very efficient technological solutions that deserve to be adopted on a large scale. This invention is brilliant enough, efficient enough, and powerful enough to get mass adoption.”
Khazzaka, who founded payments consultancy Valuechain in late 2021, proposes an alternate to the energy estimates provided by Cambridge Bitcoin Electricity Consumption Index (CBECI). The index, typically cited by Cointelegraph, estimates that Bitcoin consumes roughly 122 TW/H per year.
Taking into account the typical time period of Bitcoin mining machines yet as the rate at that new IT materials are created, Khazzaka suggests that Bitcoin consumes 88.95 TWh per year, considerably but Cambridge's estimate.
A payments specialist who wrote his dissertation about cryptography in 2003, and discovered Bitcoin in 2011, Khazzaka also puts the banking sector below the microscope to effectively compare the two monetary systems. Khazzaka told Cointelegraph he “really underestimates each facet of the banking sector,” and contrary to critics, his report is “biased to the banking industry.”
Nonetheless, taking into account the creation of cash, transporting cash, physical banking infrastructure energy consumption, etc, he arrives at a figure of 4,981 TWh. Rounded up, 5,000 TWh is consumed by the “classical payments” sector each year. Consequently, banking uses 56 times additional energy than Bitcoin.
The report examines transaction potency revealing that presently, “at current block size and if the blocks are filled to their most capability capacity = 5.7× higher energy potency than the classical system.” However, that’s while not taking into consideration the Lightning Network. within the interview, Khazzaka explained:
“Lightning will allow the bitcoin protocol to do more transactions without consuming more energy. And this is magic.”
( Joseph Hall, Cointelegraph, 2022)