L’Adan publie son tout premier rapport annuel qui reprend l’activité de l’association en 2020. Télécharger ⬇️

Blockchain protocols and their energy footprint

In recent months, the idea that blockchain technologies and crypto-assets consume an excessive amount of electricity has been at the heart of discussions. In its previous article on the ecological impact and challenges of blockchain technologies, Adan qualified the debate on the energy consumption of the various blockchain networks and recalled that the energy requirement of these technologies depends on their consensus protocol and the number of users of the network.

Furthermore, the energy consumption of a blockchain protocol should not be equated with its environmental footprint. Indeed, many use cases related to blockchain technologies and crypto-assets tend to improve the environmental footprint of these decentralised networks, in particular by using the surplus of decarbonised energy in certain geographical areas where the need for electricity is lower than the level of production.

The proposed classification presents the energy consumption of the main public blockchain networks according to the protocol on which they operate. It is thus illustrated that there can be no general statement and that a granular analysis, depending on the technological characteristics of these networks, is necessary1Estimates derived from this classification should be interpreted with caution. Due to the numerous studies conducted regarding the energy consumption of crypto-assets, the results may vary depending on the methodologies adopted.

Energy footprint of blockchains

La thèse selon laquelle les développeurs de projets blockchain ne prennent pas en compte l’impact environnemental lié à la consommation d’énergie est discutable :

  • Among the 10 largest blockchain networks, the vast majority have adopted a validation protocol that consumes little electrical energy. Most of the project leaders are embarking on a policy of decarbonisation, and some are aiming to achieve carbon neutrality.
  • While some protocols (notably Bitcoin) have a high energy consumption, the energy spent in the validation of transactions is, very often, renewable. 

The energy consumption of the crypto-asset industry is lower than that of traditional industries.

Many initiatives are emerging to mitigate the energy consumption of blockchain networks.

Energy consumption of cryptocurrencies

This article aims to study the environmental footprint of the main blockchain networks within the ecosystem. The following protocols have been selected in a comprehensive manner:

Bitcoin (BTC)

Consensus protocol: Proof-of-Work (POW)

Hash function: SHA-256

Energy consumption per transaction2 Data on the energy consumption per transaction of a blockchain network does not fully reflect the energy consumption of these technologies. On the other hand, such data makes it easier to compare different blockchain networks, regardless of their consensus protocol. The data on energy consumption per transaction is taken from the TRG Data Center study: significant (estimated at around 707 KWh)

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.

On the other hand, it should be noted that the energy consumption of the Bitcoin network does not reflect its environmental footprint. Indeed, according to the Cambridge Bitcoin Electricity Consumption Index (CBECI), an increasing share of Bitcoin’s total electricity consumption comes from renewable energy sources (hydro, solar and wind). A recent survey by the Bitcoin Mining Council confirms this study and reveals that 56% of the energy spent on mining is renewable. Mining is an effective way to regulate the power generation market by using surplus renewable energy from certain isolated geographical areas (Kazakhstan, Russia, El Salvador, and others). In this context, the Bitcoin network optimises the ratio between energy consumption and production and reduces the risk of energy waste worldwide. Finally, the energy consumption of the Bitcoin network is particularly variable and many events can indeed change the computing power needed for block validation (hashrate). The recent exodus of Chinese miners led to a drop of more than 50% in the hashrate.

⬆️ Back to list

Ethereum (ETH)

Consensus Protocol: Proof-of-Work (POW)

Hash function: Ethash

Energy consumption per transaction: significant (estimated at about 62.5 KWh)

The annual consumption of the Ethereum network is estimated at 74.6 TWh. Although Ethereum is still running on PoW to date, the transition to PoS is underway. This transition (called “The merge”) will normally be completed in the first quarter of 2022 and will bring many improvements that have been theorised for several years. With this in mind, members of the Ethereum community have attempted to calculate the energy consumption of Ethereum during the transition to PoS. They estimate that the Ethereum network will consume 99.95% less energy after the transition. Thus, while there is no statistical study yet on the future energy consumption of Ethereum, it is undeniable that the transition to Ethereum 2.0 will reduce it considerably.

⬆️ Back to list

Cardano (ADA)

Consensus protocol: Proof-of-Stake (POS)

Energy consumption per transaction: negligible (estimated at about 0.5479 KWh)

Cardano is an energy-efficient blockchain. Thanks to the use of POS, the Cardano network consumes on average only 6 GWh of energy per year. Cardano’s annual energy consumption is comparable to the energy consumption of two power plants. While this may seem high at first glance, a large proportion of the validators use renewable energy to keep the network running.

⬆️ Back to list

Binance Smart Chain (BNB)

Consensus Protocol: Proof -of-stake Authority (PoSA)

Energy consumption per transaction: negligible

Binance Smart Chain is a weakly decentralised network (i.e. composed of only 21 validator nodes to ensure the functioning of the network) that ensures the development of decentralised finance projects (i.e. it is called CeDeFi). The BSC runs on the PoSA, so its energy footprint is relatively small. PoSA shares similarities with Proof-of-Authority (POA), which gives a limited number of pre-designated actors the power to validate transactions and update the distributed ledger. Unlike the Proof-of-Work protocol, Proof-of-Authority is characterised by its low power consumption and also by its high degree of centralisation among a small number of network validators.

⬆️ Back to list

Solana (SOL)

Consensus protocol: Proof-of-History (PoH)

Energy consumption per transaction: negligible

The PoH on which the Solana blockchain protocol is based allows the nodes of the Solana network to validate transactions without requiring the computing power of the POW. Thanks to this consensus mechanism, the Solana network stands out for its high performance in terms of scalability.

Solana considers that this consensus mechanism undoubtedly improves the speed of transactions on Solana and optimises the energy consumption of the network.

⬆️ Back to list

Polkadot (DOT)

Consensus Protocol: Nominated Proof-of-Stake (NPOS)

Energy consumption per transaction: negligible

The Polkadot Blockchain operates on a nominated proof-of-participation protocol where nominators support validators with their own participation in the network.

Although no official data has yet been published, it would appear that the Polkadot blockchain, which does not rely on the computing power of its validators, is less energy intensive than other POW-based blockchains.

Members of the Polkadot community estimate that the network consumes about 0.8 GWh per year.

⬆️ Back to list

Dogecoin (DOGE)

Consensus protocol: Proof-of-Work (POW)

Hash function: scrypt

Energy consumption per transaction: negligible (estimated at about 0.12 KWh)

The transaction validation algorithm used by Dogecoin is scrypt. This algorithm requires less computing power than SHA-256.

Although Dogecoin does not consume as much energy as Bitcoin and Ethereum, the validation of transactions by the POW still requires some energy.

⬆️ Back to list

Algorand (ALGO)

Consensus protocol: Pure Proof-of-Stake (PPOS)

Energy consumption per transaction: negligible

Thanks to the use of PPOS, the Algorand network consumes little energy to operate. The users of the network are randomly selected (according to their investment in the Algorand ecosystem) to propose blocks and proceed to their validation. Thus, each user of the network can be chosen to participate in its operation.

Algorand would like to be the first blockchain network to achieve carbon neutrality. The Algorand ecosystem is committed to making its network completely carbon neutral. Algorand has partnered with ClimateTrade to offset the low level of carbon produced by the Algorand network and make Algorand the first carbon neutral blockchain network.

⬆️ Back to list

Polygon (MATIC)

Consensus protocol: Proof-of-Stake (POS)

Energy consumption per transaction: negligible

Polygon is an Ethereum commit chain for building blockchain protocols compatible with the Ethereum network using POS as the consensus protocol.

Polygon claims that thanks to the SOP, the Polygon blockchain consumes only 0.00079 TWh annually.

⬆️ Back to list

Tezos (XTZ)

Consensus protocol: Proof-of-Stake (POS)

Energy consumption per transaction: negligible

Tezos is a programmable blockchain like Ethereum. On the other hand, the energy consumption of the Tezos blockchain is currently lower due to the use of PoS as a consensus protocol. Tezos even estimates that its energy consumption is equivalent to 0.00006 TWh/year which would make it one of the most responsible networks in the ecosystem.

⬆️ Back to list

IOTA (MIOTA)

Consensus Protocol: Tangle

Energy consumption per transaction: negligible (estimated at about 0.00011 KWh)

The IOTA consensus protocol is completely different from what we see in Bitcoin or similar blockchains. 

The Tangle works with acyclic directed graphs (DAGs) and allows network users (who pass transactions) to be directly involved in the validation of transactions. The validation of IOTA transactions therefore requires little computing power.

⬆️ Back to list