- Energy consumption data shows that blockchain technology does not use as much energy as some much less criticized technologies.
- Ethereum has dropped the climate impact of blockchain technology significantly with its transition to PoS.
While blockchains get a bad reputation for their high energy consumption, data shows that they are not the biggest energy-consuming technologies. Both YouTube and the gold mining industry used more than 2x the energy consumed by Bitcoin mining and Netflix in 2022.
The data highlighted by the research arm of crypto exchange Crypto.com shows that the video streaming platform consumed 244 TWh/year. Similarly, gold mining used 240 TWh/year. This is in comparison to Bitcoin mining which used 100 TWh/year and Netflix which used 94 TWh/year.
Even more remarkable is the massive energy consumption slashing that the Ethereum blockchain achieved in 2022. Following its migration to being a proof-of-stake (PoS) blockchain, Ethereum now has an estimated energy consumption of 0.0026 TWh/year.
This is around 1 percent of the 0.26 TWh/year consumed by online payments giant PayPal. It is also a more than 99% drop in Ethereum’s previous proof-of-work (PoW) energy consumption estimate.
L’un des effets positifs du Merge d’ #Ethereum est que la consommation d’énergie d’Ethereum a chuté de 99,95 %.
La consommation d’énergie de la #blockchain PoS Ethereum est estimée à environ 1 % de celle de PayPal. pic.twitter.com/zt5ouw12RQ
— MoneyRadar (@MoneyRadar_FR) December 27, 2022
Crypto.com notes in its report that the September Merge upgrade was one of the most anticipated crypto events of 2022. Financial information and analytics firm S&P Global shared a similar sentiment.
S&P highlighted in a September blog post that the upgrade which made the drop in energy consumption possible was critical for Ethereum. This is because it drops the climate footprint of the overall crypto industry significantly. The post also noted that all applications in the Ethereum ecosystem would benefit from the reputational facelift of the blockchain.
Will criticisms of Bitcoin’s energy consumption die down soon?
Meanwhile, the S&P projection for Bitcoin is not so optimistic that criticisms of its energy consumption will fade away soon. The firm expects the criticisms to even increase as investors become more concerned about sustainability.
These criticisms have already seen the Bitcoin network suffer some setbacks over the years. Back in 2021, China banned Bitcoin mining leading to a massive exodus of miners to other countries and a BTC price collapse.
The country stated at the time that the activity’s high energy consumption was preventing it from reaching its carbon emission targets. However, Bitcoin proponents maintain that Bitcoin’s high energy consumption is by design and necessary.
One such Bitcoin proponent is Andrew Webber, co-founder and CEO of Digital Power Optimization Inc. His company works with independent power producers and other energy companies to harness excess electricity for bitcoin mining. He told S&P that over time, Bitcoin mining activity will use the least valuable and yet sustainable sources of energy in the world.
He supports the notion that due to stiff competition, Bitcoin miners will continue to seek out “obscenely cheap power.” Some of these power sources are currently not being utilized as they are hard to reach and harness for everyday use. But they will not be for Bitcoin mining which is a portable industry.
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