Bessemer Trust: BTC ‘Remains Highly Energy-Inefficient, ETH More Efficient’
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Wealth management firm Bessemer Trust has dismissed BTC as being highly energy-inefficient, while noting that ETH is “more efficient”.
In its Quarterly Investment Perspective report, Bessemer Trust discusses BTC in three contexts—as a store of value, a mode of transaction, and as a ledger of accounts. As a mode of transaction, the report claimed that “BTC remains highly inefficient from an energy-usage perspective,” adding, “Other cryptocurrencies, such as ETH, are more efficient in this regard.”
Cryptocurrencies’ energy consumption is measured in terawatt-hours, a measurement that tracks a unit of energy equal to outputting one trillion watts for one hour. It is usually used to track the annual energy consumption of entire countries.
Based on the available data, Bessemer’s assessment of BTC is correct. Per Digiconomist, a website dedicated to unearthing the unintended consequences of technology, BTC consumes approximately 103 terawatt hours (TWh) of energy per year. In contrast, Cambridge University puts BTC’s annual energy consumption at 113 TWh.
In comparison, Digiconomist estimates that ETH only consumes 38 TWh of energy per year. However, like BTC, ETH’s energy consumption is rising, and is now up 100% from 14 TWh at the start of the year.
BTC ‘offers security’
The wealth management firm had more to say about BTC beyond its energy struggles.
Assessing the cryptocurrency’s role as a ledger of accounts, Bessemer Trust’s report praised blockchain technology, describing it as an “incomparable ledger,” while adding that the anonymity behind the BTC blockchain is both a “compelling” and “detracting” characteristic.
“It offers security amid potential government and social instability, yet it simultaneously offers refuge for those engaged in illicit finance,” the report said.
However, the report also had some praise for BTC. As a store of value, the flagship cryptocurrency is appealing as an investment asset because of its limited supply, the report said.
“The finite supply of BTC, in contrast to dollars or other government-produced currencies, is its greatest draw in terms of its ability to retain its value long term,” the report said.
Ultimately, the report suggests that because of BTC’s price volatility, it will not replace the US dollar—or even be a meaningful part of a current traditional asset allocation.
