Recent Developments in Blockchain Technology and their Impact on Energy Consumption

TL;DR

This paper reviews the diverse landscape of blockchain technology, emphasizing that while Bitcoin's high energy use is notable, many alternative solutions are more energy-efficient and could lead to net energy savings.

Contribution

It highlights the heterogeneity of blockchain implementations, discusses recent developments like zk-rollups, and argues that blockchain's energy issues are not universal.

Findings

Bitcoin's power consumption is high but not representative of all blockchains.

Alternative blockchain solutions with lower energy use are already available.

Emerging concepts may further reduce energy consumption in large networks.

Abstract

The enormous power consumption of Bitcoin has led to undifferentiated discussions in science and practice about the sustainability of blockchain and distributed ledger technology in general. However, blockchain technology is far from homogeneous - not only with regard to its applications, which now go far beyond cryptocurrencies and have reached businesses and the public sector, but also with regard to its technical characteristics and, in particular, its power consumption. This paper summarizes the status quo of the power consumption of various implementations of blockchain technology, with special emphasis on the recent 'Bitcoin Halving' and so-called 'zk-rollups'. We argue that although Bitcoin and other proof-of-work blockchains do indeed consume a lot of power, alternative blockchain solutions with significantly lower power consumption are already available today, and new promising concepts are being tested that could further reduce in particular the power consumption of large blockchain networks in the near future. From this we conclude that although the criticism of Bitcoin's power consumption is legitimate, it should not be used to derive an energy problem of blockchain technology in general. In many cases in which processes can be digitised or improved with the help of more energy-efficient blockchain variants, one can even expect net energy savings.