Accept that the knife blades were just for show, and the mechanism just rolled the real painting onto one roller while ejecting a pre-shredded replica from another roller.
You still have the problem of how the device was powered and triggered. Obvious way to trigger it would be to have some sort of radio receiver, or a mobile phone or pager or similar inside and then someone in the audience or watching via video could transmit the 'go' signal.
But it's difficult to design something that can run for many years, even in low-power receive mode, without depleting the batteries - and if you use mobile phone technology you have the problem of making sure that the contract for the 'receiver phone' stays alive.
You can't just call the phone to trigger the 'shred' event, as that would be triggered by spam calls or wrong numbers - so you'd need the 'phone' to be programmed to check for a call from a particular number, or have to receive and decode a 'trigger' text message, of similar. This would need the help of a very competent engineer - probably not the sort of thing an artist like Banksy could do himself.
Like I say, difficult to make something like that run on batteries for many years - so did it need to be recharged? Who was in on the secret so that they could periodically recharge the batteries, or fit new batteries? Where was the painting kept, prior to being transported to the auction house?
Also it's very convenient that the Auction house positioned the painting with nothing underneath to get in the path of the 'shredded painting' and that all the media cameras were pointed at the painting and rolling when the event took place. It all smells like a pre-arranged 'art event' to me.