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Exploring Proof-of-Work's Electricity Consumption

release time:2022-06-16 source:academy hits:12941
Electricity consumption from using proof-of-work is a contentious subject at the best of times. However, the global energy crisis prompts the blockchain community to seek sustainable alternatives for crypto mining electricity sources. Crypto mining energy consumption tends to increase as blockchain networks grow, particularly with proof-of-work blockchains. Accordingly, the blockchain community appears to be warming up to alternative consensus mechanisms such as proof-of-stake.
The Bitcoin blockchain is growing exponentially. As such, proof-of-work (PoW) electricity consumption is outpacing that of some countries. Crypto mining electricity usage for Bitcoin alone is roughly equivalent to that of Poland. Despite several initiatives to reduce the environmental footprint of crypto mining energy consumption, the process of bringing new Bitcoin into circulation is still expensive and energy-intensive. Furthermore, proof-of-work electricity consumption will most likely increase as the Bitcoin blockchain grows. So, what makes Bitcoin mining so expensive? Also, what can we do to reduce crypto mining energy consumption?

In this article, we’re going to dive deep into the subject of crypto mining energy consumption. We’ll explore the impact of proof-of-work electricity consumption. Plus, we’ll take a look at solutions being developed to increase sustainability and reduce the environmental footprint of the Bitcoin network. In addition, we’ll explore the reasons crypto mining electricity usage is becoming a hot topic among regulators globally.

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What is a Blockchain?

Blockchain is a type of distributed ledger that serves as a permanent record or database for cryptocurrency transactions. Unlike a typical database, blockchains structure transactional data in groups called “blocks”. Each block has a specific storage capacity. When it reaches capacity, a block is appended to the blockchain and interlinked with the previous block in the chain. Once appended to the blockchain, the transactional data within a block cannot be altered.

Instead of storing data in a central location, blockchains use a distributed network of computers called “nodes”. Each node in the network holds a copy of the same ledger. Also, every transaction that enters the blockchain has a specific timestamp. Accordingly, anyone trying to defraud the network with an illegitimate transaction is easy to distinguish. Furthermore, this system facilitates the development of decentralized cryptocurrency networks such as Bitcoin. Blockchains provide a secure record of transactions that creates trust throughout the network without the need for intermediaries or a central point of authority.

What is Proof-of-Work (PoW)?

Now, let’s consider what proof-of-work (PoW) is. PoW is a consensus mechanism used in decentralized blockchain networks. It enables network participants called “miner nodes” to reach a consensus on the legitimacy of transactions on a blockchain network and generate new crypto in a process called “mining”. 

The most famous proof-of-work (PoW) mining example is the Bitcoin blockchain. PoW requires network participants to expend substantial amounts of energy to compete (work) for the right to validate transactions and earn subsequent block rewards. Each mining node attempts to solve a complex math problem to find the target hash. This means finding a numeric value equal to or less than a target value. The first miner to solve this puzzle earns the right to append a block of transactions to the blockchain. Furthermore, PoW mining prevents “double-spending”, where somebody attempts to spend the same asset twice.

Because PoW miners have to spend significant amounts of energy to validate transactions, they have an economic incentive not to try and validate illegitimate transactions, as they would lose out on any potential block rewards. However, the amount of energy PoW miners use grows exponentially as the blockchain becomes larger and more miners participate in consensus. In response, some forward-thinking cryptocurrency projects opt for a less computationally intensive consensus mechanism called “proof-of-stake” (PoS).

What is a 51% Attack?

A 51% attack is a type of threat to public blockchain networks such as Bitcoin. It involves a group of miners controlling 51% or more of the network’s computational power. Further, a 51% attack enables a bad actor to pause new transactions, prevent miners from verifying blocks, and spend coins twice. 

Although these attacks have the potential to seriously disrupt the Bitcoin network, they would not be effective in trying to generate new coins. That said, an attacker would need billions of dollars worth of crypto mining electricity to carry out a successful 51% attack on the Bitcoin network.

If you want to learn more about the vulnerabilities of the Bitcoin network, check out the Bitcoin Attacks course at Moralis Academy. This course teaches students about some of the biggest obstacles faced by the Bitcoin community. Become blockchain certified with Moralis Academy!

Is Proof-of-Work Sustainable?

Proof-of-work electricity consumption is causing concern among regulators globally. Because of the substantial amount of energy required to validate transactions, Bitcoin mining has a significant environmental impact. Bitcoin mining uses a combination of fossil fuels and renewable sources. Estimates suggest that over 70% of proof-of-work electricity consumption on the Bitcoin network came from Chinese hydroelectricity in 2019. However, the Chinese Bitcoin ban quickly removed some of the most abundant natural energy sources from the equation.


Many in the industry see the proof-of-stake (PoS) consensus mechanism as a sustainable alternative to proof-of-work (PoW) consensus. Rather than relying on the energy expenditure of PoW, the PoS validator selection process is random. Network participants can become validators and secure the network by staking crypto assets and locking them up for a period of time. This gives them the right to validate transactions and earn the relevant rewards for their contribution to the network.

While PoW blockchains rely on a single validator for block verification, PoS blockchains use multiple validators. Rather than competing for the right to validate blocks, the network shares the responsibility. Not only does this eliminate excessive energy expenditure, but it also reduces the impact of attacks. 

Furthermore, PoS consensus requires much less computational work than PoW when it comes to verifying transactions. They also provide a higher degree of security for smaller blockchain networks. Also, PoS blockchains are generally less advantageous to attack than PoW blockchains. An attempt to defraud a PoS blockchain results in a stake being slashed. Accordingly, PoS validators have a financial incentive to uphold the security of the network. 

PoS aims to make cryptocurrency networks more sustainable and scalable while reducing crypto mining electricity consumption. Rather than exchanging energy for cryptocurrency, PoS validators lock up the base currency of the network they want to secure. Moreover, PoS significantly reduces energy expenditure in crypto mining while making a 51% attack highly unlikely. This is because an attacker would need to gain 51% of the cryptocurrency supply for any given blockchain network. Plus, an attacker would lose any coins they had staked.

The Impact of Crypto Mining Energy Consumption

According to Cambridge Center for Alternative Finance (CCAF), the Bitcoin network consumes around 144.63 TWh (terawatt-hours) annually. This means that crypto mining energy consumption for Bitcoin alone is higher than that of gold. Furthermore, PoW electricity consumption from Bitcoin’s network is around the same as that of a small country such as Malaysia or Sweden and around half that of the UK.

European lawmakers are currently in talks about potential solutions to proof-of-work electricity consumption. Also, Swedish regulators have called on the European Union (EU) to ban Bitcoin mining because of the adverse environmental impacts. The environmental impact of crypto mining electricity consumption is something that many in the industry are keen to address. 

Particularly during a global energy crisis, the sustainability of crypto mining energy consumption is coming under increasing scrutiny. Accordingly, there is a push from within the Bitcoin community to source green energy solutions for Bitcoin mining. Also, many new crypto projects are opting for a PoS consensus mechanism rather than PoW. 

PoW mining relies heavily on fossil fuels. Estimates suggest that Bitcoin has a carbon footprint equivalent to that of countries such as Sri Lanka or Jordan. Although tokenized carbon credits go some way to offsetting these emissions, optimizing the use of energy and minimizing waste is likely to yield greater results in reducing proof-of-work electricity consumption.

Although the Bitcoin network has a relatively small carbon footprint compared to that of the US military, it still uses around 57 million tons of CO2 annually. This is more than double that of Ethereum. Plus, the Bitcoin network has a limited throughput of seven transactions per second (TPS). As such, CO2 emissions generate significantly fewer transactions per unit of energy than other leading blockchain networks. 

Are Crypto Mining Bans Effective?

Isolated cryptocurrency mining bans and regulations are largely ineffective. For example, when the Chinese government banned Bitcoin mining, a substantial amount of the hashrate was simply absorbed in crypto-friendly neighboring countries. Similarly, the acceptance of Bitcoin as legal tender in a small country such as El Salvador is seemingly unlikely to impact crypto regulation in countries with large economies like the US. 

Moreover, simply banning Bitcoin mining does little to solve the environmental impact of crypto mining energy consumption. That said, several solutions are currently under development to reduce proof-of-work electricity consumption.

Crypto Mining Electricity Solutions

Various initiatives exist to curb crypto mining energy consumption. Estimates about the percentage of renewable or green energy sources contributing to proof-of-work electricity consumption on the Bitcoin network vary. However, there are several viable options available. For example, naturally occurring hydroelectricity exceeds the overall energy requirements for the entire cryptocurrency industry. Once harnessing hydropower becomes more efficient and affordable, hydroelectricity has the potential to significantly reduce the environmental impact of crypto mining.

Also, flared natural gas (a byproduct from oil extraction) is energy that is almost completely wasted. Due to the location of oil rigs and the cost of transporting natural gas, oil companies simply burn off this byproduct and let it damage the environment. However, flared natural gas provides energy companies with a natural resource that can be harnessed and monetized for crypto mining. A similar situation is also occurring in the aluminum smelting industry. Not only does this help to reduce emissions, but it also provides a new revenue stream for energy companies and metal refineries.

In addition, there have been multiple advancements in the efficiency of mining equipment over the years. Unfortunately, many of these optimizations fail to offset the increasing proof-of-work electricity consumption on the Bitcoin network. However, with increasing efficiency in wind, hydro, and solar Bitcoin mining, the alarming requirements of proof-of-work electricity consumption could soon be a thing of the past.

Exploring Proof-of-Work's Electricity Consumption – Summary

PoW mining was essential in laying the foundations for decentralized cryptocurrency networks. In the early stages of development, the Bitcoin network had relatively modest levels of crypto mining energy consumption. Before the introduction of energy-intensive mining equipment, it was possible to mine Bitcoin using a standard computer. These days, however, proof-of-work (PoW) electricity consumption is becoming a contentious topic for the Bitcoin community.

The exponential increase in crypto mining energy consumption is spurring an industry-wide movement to reduce the environmental footprint of crypto mining. In recent weeks, electric vehicle manufacturer Tesla, payments provider Block (previously Square), and Bitcoin mining firm Blockstream announced plans to collaborate in a bid to mine Bitcoin using solar power. 

Such a move could significantly reduce crypto mining energy consumption. Furthermore, the propensity for emerging crypto projects to adopt variations of the proof-of-stake (PoS) consensus mechanism suggests that the industry is shifting toward a greener future. At Moralis, we have a commitment to sustainability. This means lowering carbon emissions and ensuring that we don’t waste resources. You can learn more about our commitment to sustainability by reading our Web3 environmental policy. Also, check out our “Blockchain in the Energy Sector” article to learn more about crypto mining energy consumption and how energy providers are using surplus energy to mine Bitcoin.

Despite the various issues with crypto mining energy consumption, there have been several advancements in the efficiency of the Bitcoin network. For example, Lighting Network is a Bitcoin layer-2 solution that facilitates fast, low-cost Bitcoin transactions. Check out the Lightning Network & Lightning App Programming course at Moralis Academy to learn more about Lightning Network and how it helps to scale the Bitcoin network. Kickstart your blockchain education today with Moralis Academy!
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