How Energy Efficient Is The Ethereum?

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  • Ethereum consumes approximately 0.0026 TWH/yr energy, which is 50,000x less than Bitcoin.
  • The main reason behind its efficiency is a proof-of-stake consensus algorithm

Ethereum’s Energy Consumption 

Ethereum is the second biggest blockchain network in the world. It is not only used as a cryptocurrency for trading but it is also a platform for all the major decentralized projects. It has a 19% dominance on the crypto market with a market cap of $503.85 Billion. Hence, it is a big blockchain. 

Blockchains generally require a lot of electricity to function properly. For example, the Bitcoin blockchain uses 127 terawatt-hours of electricity a year. This energy is equivalent to many small countries such as Norway and Denmark.

How Much Energy Does Ethereum Consume?

Ethereum used to consume a lot of energy in its initial days when it was working on the proof-of-work consensus algorithm. But later it shifted its consensus mechanism to proof-of-stake. This converted into a much more energy-efficient network. This conversion from proof-of-work to proof-of-stake not only saved a lot of energy for the network. But also made it faster and more secure. 

Currently, Ethereum is a green blockchain which means that it consumes much less energy as compared to other blockchains. Although it is very difficult to calculate the energy consumption of a blockchain, the CCRI(Crypto Carbon Rating Institute) conducted detailed research on the energy consumption of the blockchain and found out that Ethereum is one of the most energy-efficient blockchains in the whole blockchain ecosystem. 

According to the report presented by CCRI, the energy consumption of the Ethereum blockchain is equivalent to approximately 0.0026 TWh/yr. The carbon compound that Ethereum leaves is equivalent to 870 tonnes of CO2. However, these values frequently change as nodes on the blockchain increase and decrease. 

This might seem like a lot of energy consumption but if we compare the annual energy consumption of Ethereum to other technological services then you will get a broader view of how much energy Ethereum consumes in actuality. 

Compared to Other Blockchains

Global Data centres consume 200 Terawatt hours of electricity which is 77,000 times more than Ethereum. Bitcoin which uses a proof-of-work consensus algorithm consumes 131 terawatt hour 50,000 more than Ethereum.

Paypal the centralized payment service uses 100x more energy than Ethereum which is equivalent to 0.26 terawatt hour energy.

How Ethereum Reduced Its Energy Consumption?

The main reason for the reduction in the energy consumption of the Ethereum network is the shifting of it from a proof-of-work blockchain to a proof-of-stake. This shift has proved to be beneficial for the network because it has not only reduced the energy consumption of the network but also made it faster and more secure. Proof-of-stake consensus algorithm has made it 30,000x energy efficient. The fundamental working of both the blockchain explains the reason behind it. 

In proof-of-work blockchain, different miners use their devices to mine new blocks of the blockchain by guessing the hash. Which is just solving the cryptographic puzzle. They all like running a race to guess the correct hash. Hence many computers use energy to do the same work. 

While in proof-of-stake blockchain instead of miners there are validators whose work is to validate the transactions. One block is solved at a time which is much more energy efficient than proof-of-work because there is no wastage of energy as well and it also strengthens the network. As more currency will be at stake, the network will become.

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