Blockchain technology has the potential to revolutionize a wide range of industries, from finance and supply chain management to healthcare and the internet of things. However, the environmental impact of blockchain has become a growing concern in recent years. With the increasing popularity of blockchain, the energy consumption of the network has also been increasing. This has led many experts to question whether blockchain is sustainable in the long term.
One of the main reasons for the high energy consumption of blockchain is the proof-of-work (PoW) consensus mechanism used by many blockchain networks. PoW requires participating nodes to perform complex mathematical calculations in order to validate transactions and add them to the blockchain. These calculations require a significant amount of computational power, which in turn consumes a lot of energy. According to a study by the University of Cambridge, the energy consumption of the Bitcoin network alone was estimated to be around 121.36 TWh per year in 2019, which is equivalent to the energy consumption of countries like Egypt and Malaysia.
Another issue is the carbon footprint. The energy used by blockchain network is mostly generated from non-renewable sources, which results in high level of carbon emissions. According to a study by the Digiconomist, the Bitcoin network is responsible for around 22-22.9 million metric tons of CO2 emissions per year. This is roughly equivalent to the emissions produced by the entire country of Jordan.
However, it’s worth noting that not all blockchain networks are the same, and some newer blockchain networks use alternative consensus mechanisms that are less energy-intensive. For example, proof-of-stake (PoS) is a consensus mechanism that relies on a validator’s stake in the network, rather than computational power, to validate transactions. This means that PoS is much less energy-intensive than PoW.
Additionally, there are some recent developments that could help blockchain become more sustainable in the future. For example, some companies are experimenting with using renewable energy sources to power their blockchain networks. Additionally, there are various research and development efforts aimed at improving the energy efficiency of blockchain technology.
In conclusion, the environmental impact of blockchain technology has become a significant concern in recent years. The high energy consumption and carbon footprint of blockchain networks are caused by the proof-of-work consensus mechanism used by many networks. However, there are alternative consensus mechanisms and solutions that could help make blockchain more sustainable in the long term. It is crucial for the blockchain community to continue to research and develop solutions that promote sustainable blockchain networks and to be conscious of the environmental impact of the technology.
- S. Katzy, et al. (2019) Bitcoin and Beyond: A Technical Survey on Decentralized Digital Currencies. Institute for Computer Science, University of Rostock.
- Digiconomist. (2019) Bitcoin Energy Consumption Index. https://digiconomist.net/bitcoin-energy-consumption