The Bitcoin network can only conduct roughly 5 transactions per second, for an energy cost per transaction of 830kWh. Indeed, as computer technology improves, we can expect the power required to drop.Įnergy consumption differences are even more stark when we compare the cost of a single transaction in each network. Instead, it depends on direct economic incentives, whether through a carrot (block rewards) and/or via a stick (“slashing”, in which the stakeholders post bonds which can be seized if they misbehave).Īs such, a Proof of Stake network has no lower bound on the amount of energy it needs to expend. Unlike a Proof of Work-based consensus system like Ethereum or Bitcoin, a Proof of Stake network like Tezos does not depend on the cost of the electricity it burns to thwart potential attackers. Furthermore, the use of off-peak renewable energy by cryptocurrency mining crowds-out the development of grid-scale energy storage solutions which are necessary for the world to switch to renewable energy. Even if the use of renewable energy lowered the cost of electricity by half, miners would need to burn twice as much. Indeed, the energy used in these systems has become a substantial portion of the world’s energy budget.įurthermore, even though chips and computers have become more energy-efficient over time, this has no bearing on the energy consumption of Proof of Work networks, as it is the financial cost of the computation, and not the computation itself, that protects the safety of the network. Popular usage, even just a few common transactions, on Proof of Work networks can use as much energy, and according to some estimates can have as much of a carbon footprint as driving a gas-powered sedan one-thousand kilometers.
In addition to the raw difference in the cost of running these networks, which is ultimately reflected in the transaction costs of operating the networks, the ecological distinction is astonishing. So long as the tokens appreciate rapidly in value, that inflation-based tax is ignored by the holders this may no longer be true if appreciation stops. Proof of Work networks incentivize miners to produce blocks with a block reward funded via inflation, taxing all holders of the tokens to execute transactions on the network. These numbers differ by a factor of over two million, between six and seven orders of magnitude. Some estimates of Ethereum’s annual energy consumption place it at around 26TWh, a draw of 3 gigawatts, comparable to Ecuador, a country of 17 million people.īy contrast, the energy used annually by validators of the Tezos network is probably in the range of 60MWh, a continuous draw of perhaps 7 kilowatts. If Bitcoin were a country, its annual energy consumption would place it between the mid-sized countries of Ukraine and Argentina. We’ll give the bottom line first: reasonable estimates from the University of Cambridge place Bitcoin’s current annual energy consumption at 130TWh, a continuous draw of 15 gigawatts of electricity. How much energy do Bitcoin and Ethereum consume? How do they compare to Tezos’ energy consumption, and that of newer blockchains?
The energy consumption of Bitcoin, Ethereum, and other Proof of Work-based blockchain networks has become a popular topic of discussion in recent weeks.
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