Answer:
Bali is one of the most misunderstood term, even by Hindus. Bali does not always mean killing of an animal. Bali peeTham or Bali haraNa manTapam is in all temples that follow the agama system. It is usually outside the Dhwaja stambham and is meant for feeding birds etc.
God is compassionate regardless of the species. Since prasadam isn’t usually distributed to other creatures than humans, Bali peetham allows for the birds, ants etc to come and have it.
There is a concept of killing animals in Fire Sacrifices like Ashvamedha Yaga etc. However, that is relevant in a different time and is not applicable to the current age of Kali Yuga. The practice that we see today is a very bad habit that needs to be ended.
In sakteya (worship of sakti as supreme deity), some such practices are prescribed. However, they are not meant to be taken literally. They say to sacrifice a black cat, a goat and a buffallo to the Mother. They are symbolic meaning the following:
a cat indicates stubborn thinking. By drinking milk with eyes closes, a cat thinks no one is watching it. We, usually commit mistakes and think no one is watching us. To learn that Mother is always watching us, we have to sacrifice this stubborn thinking of cat.
a goat indicates herd mentality. We blindly follow things without applying any brain whatsoever. Therefore, we must learn to use logic.
a buffallo does not maintain any sense of purity. We must maintain both physical and mental purity. This is indicated here.