Ethereum, the second-largest cryptocurrency, has consumed as much energy as Switzerland’s annual energy requirement since its inception in 2015 until the Merge. The data was derived from a study conducted by the Cambridge Centre for Alternative Finance (CCAF).
According to the research, the Ethereum network consumed a total of 58.26 Terawatt hours (TWh) before the so-called “Merge”. This event marked a major milestone for the crypto wherein it transitioned to the Proof-of-Stake consensus mechanism. The incident happened in September 2022.
In comparison, the annual electricity consumption of Switzerland during that same year was pegged at 54.88 TWh. These values highlight the immense amount of energy required to sustain the Ethereum network.
The Reduction in Energy Usage for Ethereum through Proof-of-Stake
According to the study penned by Alexander Neumüller, the lead researcher of Climate Aspects in the Cambridge Digital Assets Programme, the switch to Proof-of-Stake has resulted in a “staggering” reduction in energy usage for Ethereum. Based on the Ethereum Foundation, the shift to Proof-of-Stake was expected to significantly reduce energy consumption by 99.9%, a claim that the CCAF’s research corroborates. The transition from Proof-of-Work to Proof-of-Stake has been identified as a primary objective of the Ethereum network, and the CCAF’s report suggests that this goal has been successfully accomplished.
Bitcoin’s Energy Consumption Compared to Ethereum
Bitcoin’s energy consumption during the same period was found to be significantly higher than Ethereum’s, at 143.9 TWh as reflected in the CCAF research. While Bitcoin is the most well-known cryptocurrency, its energy consumption has been a topic of concern for many years, with some arguing that it is environmentally unsustainable.
The CCAF’s research provides further evidence of the energy-intensive nature of Bitcoin mining and the importance finding of more sustainable ways to maintain it.
CCAF’s Research on Bitcoin Mining
The CCAF is best known for estimating the energy consumption of the Bitcoin network and providing data on where Bitcoin mining takes place. The center has previously found that the United States has taken over from China as the epicenter of global Bitcoin mining, with the US responsible for almost 38% of Bitcoin’s global hashrate. The research also provides insight into the changing geography of Bitcoin mining and its impact on energy consumption.
The CCAF’s study highlights the energy-intensive nature of blockchain technology and the significant impact that cryptocurrency mining can have on energy consumption. The findings of the research demonstrate the importance of sustainable mining practices, and the switch to Proof-of-Stake by the Ethereum network is a step in the right direction. As the popularity of blockchain technology continues to grow, it is important that the industry prioritizes sustainable practices to ensure its long-term viability.
There are several ways to make the Ethereum network more sustainable, and it’s important for developers and the broader community to work together to achieve this goal. By prioritizing sustainable practices through the utilization of renewable energy sources (such as solar, hydroelectric, and wind) as well as other innovative solutions, the Ethereum network can continue to thrive while mitigating its impact on the environment.
Giancarlo is an economist and researcher by profession. Prior to his addition to Blockzeit’s dynamic team, he was handling several crypto projects for both the government and private sectors as a Project Manager of a consultancy firm.