Ethereum

Ethereum Energy Consumption | ethereum.org

page last updated: August 9, 2022

ethereum power consumption will be reduced by ~99.95% after merging from proof of work (pow) to proof of stake (pos). after the merger, ethereum will use much less carbon to be more secure.

Reading: Ethereum staking will drop power consumption

Since its inception, ethereum has aimed to implement a proof-of-stake consensus mechanism, but doing so without compromising ethereum’s vision of being a secure, scalable, and decentralized blockchain has taken years of focused research and development. therefore, the network began using proof-of-work consensus. proof-of-work consensus requires miners to use their computing hardware to solve a puzzle. The solution to the puzzle shows that the miner has expended energy, which shows that he invested real-world value for the right to add to the blockchain. both proof of work and proof of stake are just mechanisms to decide who can add the next block. Switching from proof-of-work to proof-of-stake, where real-world value invested comes from ethics staked directly into a smart contract, eliminates the need for miners to burn energy to add to the blockchain. therefore, the environmental cost of securing the network is drastically reduced.

the merger

The beacon chain has been running proof-of-stake since November 2020 alongside the ethereum proof-of-work mainnet. In 2022, ethereum developers transitioned from various testnets running proof of work to proof of stake by merging with their own beacon chains. these helped client teams test the software before moving on to more durable networks. Following these testnets, ethereum developers released new testnets for the community to use (oven and kintsugi) and ran several hidden forks of the existing mainnets and testnets. now that they have stabilized, the teams are moving into the final stages of testing: the transition from long-running testnets (ropsten, goerli, sepolia) to proof-of-stake. the merger of the ethereum mainnet with the beacon chain is expected to occur in the second half of 2022. at the time of the merger, ethereum proof-of-work mining will be disabled, proof-of-stake consensus will be done charge and the power consumed by the grid will be reduced to <0.05% of its pre-merge amount.

why proof-of-stake is greener than proof-of-work

Proof-of-work is a strong way to secure your network. transactions on the ethereum blockchain are validated by miners. miners group transactions into ordered blocks and add them to the ethereum blockchain. the new blocks are broadcast to all other node operators who execute the transactions independently and check that they are valid. any dishonesty appears as an inconsistency between different nodes. honest blocks are added to the blockchain and become an immutable part of history. the ability of any miner to add new blocks only works if there is a cost associated with mining and the unpredictability of which specific node sends the next block. these conditions are met by imposing proof of work. to be eligible to submit a transaction block, a miner must be the first to submit the solution to a computationally expensive puzzle. To successfully take control of the blockchain, a rogue miner would have to consistently win the proof-of-work race by investing in enough hardware and power to outperform most other miners.

This network security mechanism is problematic for several reasons. First, miners can increase their chances of success by investing in more powerful hardware, creating the conditions for an arms race in which miners acquire ever more power-hungry mining equipment. this increases network power consumption and wasteful hardware. second, ethereum’s proof-of-work protocol currently has a total annualized power consumption roughly equal to that of finland1 and a carbon footprint similar to that of switzerland1.

See also: What Is Triple Halving and How Will It Shape Ethereums Future? 

Proof of stake uses validators instead of miners. validators perform the same function as miners, except instead of spending their assets upfront as energy expenditure, they stake eth as collateral against rogue behavior. this eth at stake can be destroyed if the validator misbehaves, with harsher penalties for more nefarious actions. this strongly encourages active and honest participation in securing the network without requiring a large expenditure of energy. Since almost all of the energy spent on securing the proof-of-work network comes from the mining algorithm, switching to proof-of-stake dramatically reduces energy expenditure. There’s also no benefit to investing in more powerful hardware with proof of stake, so no arms race conditions and less e-waste. ethereum validators can run on typical laptops or low power devices like raspberry pi.

read more about how ethereum implements proof of stake and how it compares to proof of work.

spend proof of stake energy

Estimates based on the current beacon chain suggest that merging with Proof-of-Stake could result in a 99.95% reduction in total energy use, with Proof-of-Stake being about 2,000 times more energy efficient than Proof-of-Stake. the proof of participation. to work. the energy expenditure of ethereum will be approximately equal to the cost of running a modest laptop for each node in the network.

Many articles estimate energy expenditure “per transaction” to compare blockchains to other industries. the benefit of this is that it is easy to understand, but the energy required to mine a block is independent of the number of transactions within it. one unit of energy expenditure per transaction implies that fewer transactions would lead to less energy expenditure and vice versa, which is not the case. a per-transaction estimate depends heavily on how you define a blockchain’s transaction throughput, and you can modify this definition to make the value appear higher or lower.

for example, on ethereum, the transaction throughput is not just the base layer, it’s also the sum of the transaction throughput of all your “layer 2” stacks, which are generally not included in the calculations and would drastically affect reducing them. This is why tools that compare energy consumption per transaction between platforms are misleading.

More relevant is the total energy consumption and carbon footprint of the network as a whole. Based on these values, we can examine what that network offers its users and society in general and make a more holistic assessment of whether or not that energy expenditure is justified. per-transaction measurements, on the other hand, imply that the value of the network only comes from its role in transferring crypto between accounts and prohibits an honest cost-benefit analysis.

See also: 4 Steps to Make Sure You Have Ethereum in Your Wallet | GaryVaynerchuk.com

digiconomist provides network-wide power consumption and carbon footprints for bitcoin and ethereum. At the time of writing, Ethereum’s total energy consumption is ~112 twh/yr, comparable to the netherlands, with a carbon footprint equivalent to that of singapore (53 tm/yr). For comparison, bitcoin currently expends around 200 twh/yr of energy and emits around 100 mt/yrc, while generating around 32,000 t of electrical waste from outdated hardware annually. disabling ethereum proof-of-work in favor of proof-of-stake will reduce this energy expenditure by more than 99.95%, implying that the total energy expenditure to secure ethereum is closer to 0.01 twh /year .

Comparison of energy expenditure across industries

The figure above shows the estimated annual energy consumption in twh/year for various industries (retrieved June 2022). Note that the estimates presented in the graph are from publicly available sources that have been linked to in the text below. they are illustrative and do not represent an estimate, promise or official forecast.

To put ethereum’s power consumption into context, we can compare annualized estimates for other industries. if we consider ethereum to be a platform to safely hold digital assets as investments, maybe we can compare it to gold mining which is estimated to spend around 240 twh/year. As a digital payment platform, perhaps we could compare it with PayPal (it is estimated that it consumes around 0.26 twh/year). as an entertainment platform, we could perhaps compare it to the gaming industry, which is estimated to spend around 34 tw/year. Estimates of energy consumption by Netflix vary dramatically between around 0.45 TWh/year (their own estimates reported in 2019) to around 94 TWh/year (as estimated by the Exchange Project). There is some discussion about the assumptions underlying these available carbon estimates. brief. alternatively, ethereum could be compared to youtube, which is estimated to spend around 244 twh/year, although these values ​​are highly dependent on the type of device the videos are streamed on and the energy efficiency of the underlying infrastructure such as data centers . YouTube energy expenditure estimates have been broken down by channel and individual videos. Those estimates imply that people consumed 45 times more energy watching gangnam style in 2019 than proof of stake using ethereum in a year.

a greener ethereum

While Ethereum’s energy consumption has historically been substantial, there has been a significant investment of developer time and intellect to move from energy-intensive block production to energy-efficient block production. quoting bankless, the best way to reduce the power consumed by proof of work is to simply “turn it off”, which is the approach ethereum has committed to taking.

At the same time, there is a large, growing and very active regenerative finance (refinancing) community being built on ethereum. refi applications use defi components to create financial applications that have positive externalities that benefit the environment. refi is part of a larger “solarpunk” movement that is closely aligned with ethereum and aims to bridge technological advancement and environmental stewardship. Ethereum’s decentralized, permissionless, and composable nature makes it the ideal base layer for the refi and solarpunk communities. after the merger, ethereum’s technology and philosophy will finally be reconciled, and ethereum should become an environmentally positive technology.

See also: 2 Trending Cryptos to Ride to the Moon (and 2 to Jettison) | InvestorPlace

further reading

  • a country’s energy value, no more: carl beekhuizen, May 18, 2021
  • ethereum energy consumption
  • ethereum emissions: a bottom-up estimate kyle mcdonald
  • ethereum power consumption index – digiconomist
  • ethmerge.com — @insidethesim

related topics

  • the ethereum vision
  • the beacon chain
  • the merger
  • fragmentation

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