In recent months, the idea that blockchain technologies and crypto-assets consume excessive amounts of electricity has been at the heart of discussions. In its previous article on the environmental impact and challenges of blockchain technologies, Adan qualified the debate on the energy consumption of the various blockchain networks, pointing out that the energy requirements of these technologies depend on their consensus protocol and the number of network users.

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

The proposed classification shows 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, based on the technological characteristics of these networks, is necessary[mfn]The estimates drawn from this classification should be interpreted with caution. Due to the numerous studies carried out into the energy consumption of crypto-assets, the results may vary depending on the methodologies adopted[/mfn].

Energy footprint of blockchains

The argument that developers of blockchain projects do not take into account the environmental impact of energy consumption is debatable:

  • Of the 10 largest blockchain networks, the vast majority have adopted a validation protocol that consumes very little electricity. Most of the project leaders have embarked on a decarbonisation policy, and some are aiming to achieve carbon neutrality.
  • While some protocols (notably Bitcoin) consume a lot of energy, the energy used to validate transactions is very often renewable.

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

Numerous initiatives are being launched to reduce the energy consumption of blockchain networks.

Energy consumption of cryptocurrencies

The aim of this article is to study the environmental footprint of the main blockchain networks within the digital asset ecosystem. The following protocols were selected for this article:

Bitcoin (BTC)

Consensus protocol: Proof-of-Work (POW)

Hash function: SHA-256

Energy consumption per transaction[mfn] Data relating to the energy consumption per transaction of a blockchain network does not perfectly 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 Centre study[/mfn]: significant (estimated at around 707 KWh)

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

However, it should be pointed out that the energy consumption of the Bitcoin network in no way reflects its environmental footprint. According to the Cambridge Bitcoin Electricity Consumption Index (CBECI), a growing proportion 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, revealing that 56% of the energy spent on mining is renewable. Mining makes it possible to effectively regulate the electricity production 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 wastage around the world. Finally, the energy consumption of the Bitcoin network is particularly variable, and a number of events can affect the computing power required to validate blocks (hashrate). The recent exodus of Chinese miners led to a drop of more than 50% in the hashrate.

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Ethereum (ETH)

Consensus protocol: Proof-of-Work (POW)

Hash function: SHA-256

Energy consumption per transaction: high (estimated at around 62.5 KWh)

The annual consumption of the Ethereum network is estimated at 74.6 TWh. Although Ethereum still operates on PoW, the transition to PoS is underway. This transition (known as “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 Ethereum’s energy consumption during the transition to PoS. They estimate that the Ethereum network will consume 99.95% less energy after this transition. While there is as yet no statistical study of Ethereum’s future energy consumption, it is undeniable that the transition to Ethereum 2.0 will reduce it considerably.

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Cardano (ADA)

Consensus protocol: Proof-of-Stake (POS)

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

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

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Binance Smart Chain (BNB)

Consensus protocol: Proof-of-Stake Authority (PoSA)

Energy consumption per transaction: negligible

The Binance Smart Chain is a low-decentralised network (i.e. made up of just 21 validator nodes to ensure the network operates) that ensures the development of decentralised finance projects (i.e. referred to as CeDeFi). The BSC operates on PoSA, so its energy footprint is relatively small compared with other blockchains. 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 not only by its low power consumption but also by its high degree of centralisation among a small number of network validators.

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Solana (SOL)

Consensus protocol: Proof-of-History (PoH)

Energy consumption per transaction: negligible

The PoH on which the Solana blockchain protocol is based enables 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 believes that this consensus mechanism undeniably improves the speed of transactions on Solana and optimises the network’s energy consumption.

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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 around 0.8 GWh per year.

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Dogecoin (DOGE)

Consensus protocol: Proof-of-Work (POW)

Hash function: scrypt

Energy consumption per transaction: negligible (estimated at around 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 a certain amount of energy.

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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. Network users are selected at random (according to their investment in the Algorand ecosystem) to propose blocks and validate them. In this way, 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.

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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 POS, the Polygon blockchain consumes just 0.00079 TWh annually.

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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 the 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.

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IOTA (MIOTA)

Consensus protocol: Tangle

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

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

Tangle works using acyclic directed graphs (DAGs) and allows network users (who place transactions) to be directly involved in validating transactions. Validating transactions on IOTA therefore requires very little computing power.

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