The electricity consumption and environmental footprint of blockchains

How blockchains work

Why blockchains consume energy

How much energy blockchains consume

  1. Bitcoin’s closest and most referenced real-world analogue is gold. Interestingly enough, gold mining consumes 131 TWh, essentially the same as its digital counterpart;
  2. global air conditioning consumes 2199 TWh (16x more than Bitcoin), global data transmission networks consume 250 TWh, and global data centers consume 200 TWh;
  3. TVs and lighting in US each use 60 TWh, while fridges in US use 104 TWh;
  4. comparing to electricity consumption of entire countries, Bitcoin consumes a bit more than Ukraine (124.5 TWh) and a bit less the Egypt (149.1 TWh). US uses 3843.83 TWh, more than 29 times the use of Bitcoin;
  5. as a fun fact, Bitcoin’s electricity consumption could power all tea kettles used to boil water in the UK for 29 years.
Electricity consumption of the mining of physical gold and digital gold (Bitcoin). Source: CBECI

Environmental implications

Alternatives to proof-of-work

Good practices

  1. perform transactions using a low gas price. This can be done by tolerating a longer confirmation time or executing transactions during times of the day with lower gas demand;
  2. reduce gas usage. For example, lazy minting, adopted for instance on OpenSea for NFT minting, minimizes gas requirements by treating the creation and sale of an NFT as a single transaction. Moreover, blockchain programmers should strive to write efficient code when implementing smart contracts such that the execution of the code has lower computational complexity and hence smaller gas fees are required;
  3. when possible, use layer 2 solutions on Ethereum or alternative blockchains that already adopt proof-of-stake;
  4. stake money to Ethereum to become a validator or take part to a staking pool. This improves the security of the forthcoming to proof-of-stake version of Ethereum;
  5. purchase carbon offsets to fund activities that have a negative greenhouse gas balance, such as planting trees or increasing the commercial viability of renewable energy.

Key takeaways

  1. the energy consumption of a proof-of-work blockchain (such as Bitcoin or, at the moment, Ethereum) is not negligible;
  2. blockchain energy footprint is linked to block production (mining) via proof-of-work consensus method and not to transaction processing;
  3. proof-of-work is fundamental to maintain the security of the blockchain system; it is a fact that major proof-of-work blockchains have not been successfully hacked so far;
  4. the main driver of blockchain energy consumption is expected mining profitability. This is mainly determined by the market price of the mined coin, the amount of fees paid by transaction senders, and the price of electricity used for the mining process;
  5. it is essential to distinguish between electricity consumption and environmental footprint. What ultimately matters for the environment is not the level of electricity consumption per se, but the carbon intensity of the energy sources used to generate that electricity;
  6. miners are energy nomads, attracted by renewable and waste energy that cannot be distributed or used in a cost-effective manner;
  7. alternative consensus methods, like proof-of-stake, can dramatically reduce the use of computation and hence energy for block validation; however, it is unclear to date whether they can replicate the same security assurances as proof-of-work.






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