The pandemic, it is said (partly to console us, partly because it is basically true) has also brought good things with it.
It has brought even the most skeptical, for example, closer to the virtual world. To all the opportunities that you can have by typing comfortably from the keyboard of your computer.
In addition to everything that can be purchased, known and visited remotely, more generally we have discovered that in addition to the three-dimensional world there is another, dematerialized, which has more and more full dignity.
We think, of course, of the metaverse. But also at alternative payment options to that with cash. We already knew that the passage of money brings with it some risks, first of all the not always easy traceability of operations.
The Covid 19 pandemic, then, taught us another important aspect: the hygienic one. Undoubtedly, avoiding the comings and goings of coins and banknotes from hand to hand protects us (also) from the possibility of contracting or spreading a series of diseases.
But had we ever considered the energy impact of traditional payments?
Cryptocurrencies, traditional payments and energy impact
Well, if we had, we had adopted a partial perspective, which (perhaps) started from a preconception. The one according to which the so-called mining of Bitcoin and the like was extremely harmful to our planet.
Meaning what? That is, in summary, for the (virtual) mining of cryptocurrencies extremely complex mathematical equations are required. Which are processed by supercomputers crammed into huge sheds. The energy they consume is huge, and to this must be added that of large fans always running to cool the machines.
In a recent article we explained to you how the Kazakhstan crisis could in part be attributable to the increase in the cost of energy. Which in turn would have cryptocurrency mining as a contributing factor.
The European Union has taken action against the environmental damage caused by the mining of Bitcoin. Which, according to the International Energy Agency, would globally produce 36 million tons of C02 every year.
So the problem is solved: if we really want, we use credit cards. But we know that traditional payments will not affect energy consumption in any way, especially when compared to cryptocurrencies. That’s it?
Michel Khazzaka’s report
In April of this year Michel Khazzaka wrote a report, which was then published on June 16 on SSRN (Social Science Research Network).
Khazzaka, a computer engineer, is the founder of Valuechain, a cryptocurrency consulting firm.
In his research, Michel Khazzaka compares the energy consumption of cryptocurrencies with that of cash payments. And not only.
Traditional payments and the energy impact
This is a dense 27-page report. Extrapolating the most significant data we can however say that, writes Khazzaka, around the world there are 842.57 billion banknotes and 1,507.7 billion coins.
As many as 26.4% of these banknotes (we are talking about 219 billion pieces) are replaced every year. Why retire, reprint and redistribute.
This cycle generates an annual energy impact of 908 TWh. Where TWh stands for terawatt hours, which equals one billion kilowatts (kW) or, if we prefer, one trillion Watts.
This means more than 6 times the annual consumption calculated for Bitcoins.
So, it comes to mind, we just have to rely on credit card and chip payments.
ATM and POS counters
Not exactly. According to Michel Khazzaka’s research, all traditional payments have a strong energy impact. For example, globally there are 4,823,564 ATMs, consuming 47 TWh per year.
VISA’s 4 large datacenters, connected with a dedicated fiber network whose length exceeds 10 million miles, consume 17.72 TWh per year.
In the world there are also 207 million POS, which all together consume 54 TWh every year.
And let’s not forget that banks around the world have 2.3 million servers and 46 million PCs connected. The total consumption of which was calculated at 33.58 TWh annually.
Better Bitcoins?
The conclusion of Khazzaka’s study is that Traditional payment systems have an energy impact equal to 56 times that of Bitcoins.
Should we believe the report? Admittedly, the fact that the author is the founder of a cryptocurrency consultancy casts more than a few suspicions. We are waiting for some banking consultant to provide us with opposite data.
Meanwhile, the Polish company Walletmor has come up with an alternative, albeit vaguely disturbing. It is a chip to be implanted under the skin, which allows you to pay instantly by bringing your hand close to the POS.
It makes us regret the barter.