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Blockchain Energy Consumption Paper

By: UCL Centre for Blockchain Technologies

Published: 2021

Organization: UCL Centre for Blockchain Technologies

Tags: Blockchain, Carbon Footprint, Distributed Ledger Technology, Proof-of-Stake, Sustainability

Overview: Popular distributed ledger technology (DLT) systems using proof-of-work (PoW) for Sybil attack resistance have extreme energy requirements, drawing stern criticism from academia, businesses, and the media. DLT systems building on alternative consensus mechanisms, foremost proof-of-stake (PoS), aim to address this downside. In this paper, we take a first step towards comparing the energy requirements of such systems to understand whether they achieve this goal equally well. While multiple studies have been undertaken that analyze the energy demands of individual Blockchains, little comparative work has been done. We approach this research question by formalizing a basic consumption model for PoS blockchains. Applying this model to six archetypal blockchains generates three main findings: First, we confirm the concerns around the energy footprint of PoW by showing that Bitcoin’s energy consumption exceeds the energy consumption of all PoS-based systems analyzed by at least three orders of magnitude. Second, we illustrate that there are significant differences in energy consumption among the PoSbased systems analyzed, with permissionless systems having an overall larger energy footprint. Third, we point out that the type of hardware that validators use has a considerable impact on whether PoS blockchains’ energy consumption is comparable with or considerably larger than that of centralized, non-DLT systems.

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