Efficient network design can significantly reduce blockchain's electricity use – report (2024)

FAQs

How much energy does a blockchain network use? ›

The annual energy consumption of the Bitcoin network is estimated to be between 90 TWh and 160 TWh depending on the studies and methodologies adopted.

Some argue that estimates of blockchain's power consumption are overblown, but even if that's true, it's still far from energy efficient. In fact, it poses an awkward conundrum: this technology was invented to make transactions more efficient is itself profoundly wasteful.

Blockchain makes transactions traceable, safe, and rapid. This technology encourages the generation and consumption of 100% renewable energy by improving the green energy supply's efficiency, flexibility, and transparency. Thus, it can reduce energy wastage and make energy consumption more efficient.

The Sustainability of Blockchain Technology

Classic blockchain technology uses proof-of-work (PoW) chains that create heavy environmental burdens due to their high energy use. Proof of Stake (PoS) blockchains, on the other hand, use a different consensus mechanism that doesn't require energy-intensive mining.

A blockchain allows the data in a database to be spread out among several network nodes—computers or devices running software for the blockchain—at various locations. This not only creates redundancy but maintains the fidelity of the data.

According to the Ethereum Foundation, the current Proof-of-Work system consumes roughly 5.13 gigawatts on a continuous basis, whereas the Proof-of- Stake system consumes only 2.62 MW, or about 99.95% less energy.

You can store documentation on the blockchain along with transaction details, eliminating the need to exchange paper. There's no need to reconcile multiple ledgers, so clearing and settlement can be much faster. “Smart contracts” can automate transactions, further increasing your efficiency and speeding up the process.

Blockchain projects can adopt energy-efficient mining practices. This includes using renewable energy sources for mining operations, investing in more energy-efficient mining hardware, and optimizing data center cooling and energy management to reduce power consumption.

With blockchain, supply chain companies can document production updates to a single shared ledger, which provides complete data visibility and a single source of truth. Because transactions are always time-stamped and up to date, companies can query a product's status and location at any point in time.

Why is blockchain so energy intensive? ›

Why so much electricity? Essentially, crypto tokens are generated by having a computer solve complicated puzzles. That requires a lot of computing power, generally done by specialized computers running calculations 24 hours a day.

From tracking the source of renewable energy to changing the relationship between how energy is produced and consumed, blockchain has the potential to transform the way companies collaborate and interact to accelerate the development of low-carbon energy.

Ans: The most sustainable cryptocurrencies for 2024 include Cardano (ADA), Tezos (XTZ), BitGreen (BITG), Algorand (ALGO), and Nano (NANO). Also, Hedera Hashgraph (HBAR), Chia (XCH), Stellar (XLM), IOTA (MIOTA), and EOS (EOS).

Energy Consumption: The most commonly cited concern is the high energy consumption associated with certain types of blockchain, particularly those that use PoW as their consensus mechanism, like the original implementation of Bitcoin.

Blockchain technology has a significant carbon footprint due to its energy-intensive process of verifying transactions and creating new blocks on the blockchain. The energy consumption of blockchain technology results in significant greenhouse gas emissions, which contribute to climate change.

Bitcoin requires a significant amount of energy, estimated to consume about 91 terawatt-hours (TWh) of electricity annually, which is more than Finland uses.

By 14 September 2022 – the day before the Merge – it had already used 17.6TWh, and was on course to end the year at 21.4TWh. The CCAF now estimates that Ethereum will consume just 6.6 gigawatt hours of electricity annually, equivalent to about 2000 typical homes in the UK.

NFT Energy Consumption

It has been estimated that minting an NFT using the Ethereum platform uses more than 260 kilowatt-hours of electricity. This is the same amount of electricity the average American household required over a period of 9 days.

“Bitcoin uses 0.5% of world energy consumption. Banking uses 56 times more energy than Bitcoin,” Michel Khazzaka, a cybersecurity engineer and cryptographer, told Cointelegraph.