So let’s now estimate how much electricity the traditional banking system consumes. This is not an easy thing to do so the calculation below is just a rough estimate that tries to provide a lower bound by using only few sources of electricity for banks and using as conservative as possible numbers.
First let’s look at how many banks are out there. After doing a bit of research, it seems that no one knows exactly how many banks are in the world and you can get different estimates ranging from around 14,600
here to 25,000
here and even more than 60,000 quasi banks associations that are almost as rigorously regulated as banks. So for the purpose of this calculation we will just take the 30,000 number.
Now we need to estimate how much electricity banks consume. For the purpose of this comparison I will just include three values: server costs, branches costs and ATM costs. Of course, banks (and its employees), consume a lot more electricity from other sources but to make my point here this will be enough.
The next number we need to add to the mix are how many servers each bank is using to run their banking infrastructure. Pick a very conservative number of an average of 100 servers per bank (keep in mind banks need servers not just for the banking infrastructure but for the bank internal operations as well like ERPs, CRMs, accounting systems, Website, etc.). If a server in average consumes 400Wh and since it always on, this means that banks consume in total 800 Mwh.
Let’s add to the mix the electricity consumption of the branches. According to the
World Bank there are 12.5 branches per 100,000 adults in the world so if the world population is 7.6 billion people and we have around 70% adults, this means a total of 665,000 branches. Only in the US they appear to be close to 100,000 branches and assuming US is around 15% or less of the entire banking system worldwide you get to around the same number.
Calculating branch consumption is more tricky since there are lots of things to take into account like size of the branch or number of employees as well as several things consuming electricity like lights, cooling, computers, monitors, etc. And they are not open 24 x 365 so after looking at a couple of articles, I have decided to settle for a conservative number 10 kwh per branch assuming an average branch has 10 light bulbs, two air conditioning units that are only use 20% of the time and 12 desktop computers running an average of 12 hours a day, 20 days a month through the year.
And finally, we need to include the ATMs networks that all banks use (that will also not needed in case bitcoin or other cryptocurrencies become the dominant currency and payment mechanism). According to the
ATM Industry Association we were on the path to get 3MM ATMs by 2015 so given that we are in 2017 already I will just use that number as a lower bound for the total number. For small bank ATM machines, the average daily power consumption comes around 5Wh.
So total consumption for banks during a year only on those three metrics is around (I am rounding) 26Twh on servers, 58Twh on branches and 13Twh on ATMs for a total of close to a 100 Twh a year.
According to the article that trigger this discussion, Bitcoin annual Twh consumption is 28.67 , so currently more than 3 times more efficient than a very conservative calculation of the cost of the global banking system. Of course you will argue that the banking systems does more than handling a currency which is true but the difference is large enough that I do not think is that relevant. Even if only 30% of banks electricity consumption was the comparable part to Bitcoin, that will still make Bitcoin more efficient.
