Proof of Stake blockchains are part of a green future

Energy use: blockchain’s most contentious (and misunderstood) issue

The energy use of blockchains is a controversial topic, with the EU-parliament proposing to ban Proof of Work (PoW) mining, advocacy groups calling for change’s to bitcoin’s underlying code, and US States passing regulation on the types of crypto-mining activities that can be undertaken. Stark energy use headlines grab readers’ attention, but that attention is lost in the complexity of the conversation.

It’s true that legacy blockchains like Bitcoin use huge amounts of energy, but it’s also true that the majority of blockchain transactions made today are carried out on vastly more efficient Proof of Stake (PoS) blockchains. These blockchains do not require computational work to verify transactions, instead rely on a “carrot and stick” system where verifying transactions requires “putting your money where your mouth is”.

Proof of Stake blockchains have very little environmental impact, and the energy efficiency of blockchains like Solana is already on par with traditional payment networks like Visa. Let’s dig in!

Blockchain energy use is largely due to Proof of Work

The blockchain energy consumption debate is rightfully focused on Proof of Work networks like Bitcoin and Ethereum. Bitcoin continuously uses about 10GW of power (10 billion Watts) — enough to power over 13 million homes, requiring the equivalent output of 6 nuclear power stations. (ref 2, ref 3) Assuming every Bitcoin miner uses the most efficient S19 miner, there are at least 2 million of these machines running globally. (ref 4)

Diving into the Bitcoin energy debate is outside the scope of this article, but it’s worth mentioning that not all of Bitcoin’s energy consumption is “wasteful”. Studies from 2020 and 2022 estimate between 39% and 58% of Bitcoin’s energy consumption coming from renewable sources. A 2021 study showed that banking and gold mining each consume more energy than Bitcoin. YouTube, Netflix, and video gaming are also on the same scale, while US clothes dryer machines consume over two-thirds of the energy of Bitcoin.

Compared to newer Proof of Stake blockchains, Bitcoin is in a league of its own with 20,000–150,000 times the energy usage of PoS chains. If Bitcoin’s power consumption was the height of the Empire State Building, PoS chains are comparable to the size of a safety pin.

Bitcoin pioneered Proof of Work as a consensus mechanism and is unlikely to change, but there is hope around the corner for Ethereum, the 2nd most power-hungry blockchain.

Proof of Stake will lower Ethereum’s energy consumption by 99.9%

Ethereum continuously uses about 5GW of power — half as much as Bitcoin. (ref 5) This is equal to the power produced by 3 nuclear power stations or consumed by 6.5 million homes. (ref 2, ref 3) Ethereum miners use graphics cards, roughly 15 million of them globally. (ref 6)

Thankfully, Ethereum is on the cusp of transition to Proof of Stake, which will happen during an event called “The Merge” as soon as mid-September. Once this happens, the Ethereum blockchain will no longer require mining machines to run, instead running on less than 10,000 low-power validator nodes, requiring about 1MW of power. (ref 7) This is equivalent to the power used by about 1,300 homes, representing over 99.9% reduction in Ethereum’s energy consumption compared to Proof of Work.

Proof of Stake blockchains are incredibly energy efficient

The Proof of Stake (PoS) was invented after Proof of Work (PoW), and is the chosen consensus mechanism for the majority of new blockchains. Because computational work is not used to verify transactions, the only energy that a PoS blockchain consumes is the energy required to keep validator nodes online and in sync with the network. (These computers are mostly downloading and uploading data, without running any intense computations) This increases the transaction throughput while decreasing energy consumption compared to PoW chains.

Validator nodes for most PoS blockchains can run on low-power PC like Intel NUCs. A 2022 report from the Crypto Carbon Ratings Institute (CCRI) measured the power required to run PoS validator nodes on multiple blockchains. If we multiply the per node consumption by the number of active validators on each blockchain, we see that the total power consumption of most PoS chains is between 10–70kW.

A power consumption of tens of kilo-Watts is equivalent to the energy consumed by less than 100 homes. (ref 3) This amount of power could be generated with a solar array on a residential building, or a mobile diesel generator similar to those found at outdoor music festivals.

Solana: the most power hungry Proof of Stake chain, but a green role model?

As shown in the previous chart, Solana is the most power-hungry PoS chain with a power draw of ~415kW. Solana’s design philosophy is to increase transaction throughput by relying on validators with powerful hardware. As measured by CCRI, a single Solana validator used 221 Watts of power, 4–10 times higher than the power used by validators on other networks. And with almost 2,000 validators globally — the 2nd highest validator count behind Cardano — the Solana network is a power hungry blockchain, consuming as much power as 550 homes. There are, however, three factors in Solana’s favor: transparency, offsets, and transaction throughput.

Transparency: the Solana Foundation has committed to estimating and publishing the carbon footprint of the network’s validators. The March 2022 energy consumption report was made by independent researcher Robert Murphy, and his report and data are open for examination. It was found that Solana validators use electricity with an average carbon intensity of 198g CO2/kWh, creating 2,976 tonnes of CO2 per year, roughly equivalent to the emissions of 1,178 US households. This is likely a huge overestimation, however, as it is based on an estimated power draw of 984W per validator, far above the CCRI’s measurement of 221W per validator. The 984W figure included two powerful graphics cards which are not currently necessary for validator operation, and 90% CPU usage which is also likely to be a large overestimation.

Offsets: But this overestimation serves as the basis for a carbon offsetting program — this allows the Solana Foundation to declare Solana as a carbon neutral blockchain. Through a partnership with the offsetting firm Watershed, the Foundation is funding the destruction of CFC and HFC refrigerants — greenhouse gasses 10,000 times as potent as CO2 — which Green America lists as one of the highest-impact ways to reduce carbon emissions. While carbon offsetting does not remove the emitted carbon from the atmosphere, the program shows a commendable level of environmental awareness and commitment from the Solana Foundation. They’re not alone, other blockchains with carbon offsetting programs include Avalanche, Algorand, and Celo.

Higher energy consumption can be justified by transaction throughput

While the Solana blockchain consumes almost twice as much power as the five other PoS chains combined, it processes 45x times more transactions. (We do not count voting transactions, which are used to achieve Solana’s consensus and not made by users or programs.)

The five chains are Polkadot, Avalanche, Cardano, Algorand, and Tezos.

When viewed through the lens of energy per transaction, Solana’s increased power consumption is justified by its transaction throughput. The Solana Foundation’s (over)estimate equates a Solana transaction to the energy usage of 2.5 google searches, or less energy than it takes to power an LED lightbulb for 5 minutes. The CCRI estimate is 4.5 times lower.

Admittedly, energy per transaction is a slightly flawed metric, since validators need to continuously expend energy to keep the blockchain running, regardless of the number of transactions being made. It is not the case that every transaction consumes energy — the point is that the Solana network as a whole provides more than enough utility to justify its energy use.

Proof of Stake blockchains like Solana are as energy efficient as Visa

One could argue that PoS chains are economic miracles: a few thousand low-power machines create a decentralized network that enables any internet user to transact in a global economy.

On a per-transaction basis, the energy consumption of Solana’s validators is comparable to Visa’s data centers: Visa explains in their most recent ESG report from 2020 that they used ~706,000GJ of energy from electricity, natural gas, and other fuels, more than half of which was consumed in data centers. Visa’s 2020 annual report shows 140.8 billion transactions were processed on Visa’s networks. (This is about 10x as many Solana’s ~14 billion yearly non-voting transactions.) Accounting for only data center energy use, we calculate that the Visa network uses 0.7 Watt-hours of energy per transaction. This is very close to the 0.75 Watt-hours per transaction that the Solana Foundation reported in their March 2022 Solana energy consumption report — which, as we’ve discussed previously, is likely a 4.5x overestimate from the CCRI measurement of 0.17 Watt-hours Joules/transaction.

This is far from a perfect comparison: Visa’s energy use in data centers is not solely due to transaction processing, it’s also likely to include support functions like video calls and file sharing. But the purpose of the Visa company and all its support functions is ultimately to facilitate transactions. Unfortunately, we don’t know the energy use of the employees of Solana Labs and the Solana Foundation. There’s also the issue that Visa and Solana end-users use energy with point-of-sale devices, mobile phones, or PCs to make transactions.

We’ll probably never know the exact numbers, but it’s clear that Solana is already roughly competitive with Visa in terms of energy efficiency per transaction. Visa, like Solana, has begun offsetting their carbon emissions and has also set a goal of transitioning to 100% renewable energy.

Proof of Stake blockchains have a place in a green future

For all the fear, uncertainty, and doubt around blockchain energy use, Proof of Stake has emerged as a technology that increases transaction throughput and reduces energy consumption. Blockchains like Solana are leading the way by demonstrating scalability, energy efficiency, and commitment to the environment through transparency reports and carbon offsetting programs. By using Proof of Stake chains to transact, users are taking advantage of an energy efficient alternative to traditional payment networks.

References:

1. The Cambridge index estimates 10.4GW. Digiconomist estimates 136 TWh/year, or 15GW continuous.
2. 1.8GW per nuclear power station, typical for a station with two reactors. (2-reactor plants are the most common and produce an average of 1848MW. Pictured is Dresden power station in Morris, Illinois, USA, which is rated to produce 1,845 megawatts.
3. Assumes 750W for the energy consumption of a typical home. (US EIA shows an average consumption of 1.24kW, but the average is lower in other countries where validators might be run.)
4. Assuming a bitcoin hashrate of 200 million TH/s, and an efficiency of 110TH/s for a Bitmain Antminer S19 Pro.
5. A bottom up estimate from Kyle McDonald comes to 2.6GW. The Digiconomist estimate comes to 8.7GW, which is 56% of their Bitcoin estimate. We’ve used 10GW for Bitcoin and half for Ethereum.
6. Likely an underestimate, assuming they are all Nvidia RTX 3060ti cards hashing at 60MH/s.
7. Assumes 100W/node, with multiple validators running per node, as outlined on the Ethereum blog.