The Energy Footprint of Blockchain Consensus Mechanisms Beyond Proof-of-Work

TL;DR

This paper compares the energy consumption of proof-of-stake (PoS) blockchain systems to proof-of-work (PoW), revealing significant differences and factors influencing their energy footprints, with PoW systems like Bitcoin being vastly more energy-intensive.

Contribution

It introduces a formal consumption model for PoS blockchains and provides a comparative analysis of six archetypal systems, highlighting key differences and influencing factors.

Findings

Bitcoin's energy use exceeds PoS systems by over three orders of magnitude.

Significant energy consumption differences exist among PoS systems.

Validator hardware type greatly impacts PoS energy efficiency.

Abstract

Popular distributed ledger technology (DLT) systems using proof-of-work (PoW) for Sybil attack resistance have extreme energy requirements, drawing stern criticism from academia, businesses, and the media. DLT systems building on alternative consensus mechanisms, foremost proof-of-stake (PoS), aim to address this downside. In this paper, we take a first step towards comparing the energy requirements of such systems to understand whether they achieve this goal equally well. While multiple studies have been undertaken that analyze the energy demands of individual Blockchains, little comparative work has been done. We approach this research question by formalizing a basic consumption model for PoS blockchains. Applying this model to six archetypal blockchains generates three main findings: First, we confirm the concerns around the energy footprint of PoW by showing that Bitcoin's energy consumption exceeds the energy consumption of all PoS-based systems analyzed by at least three orders of magnitude. Second, we illustrate that there are significant differences in energy consumption among the PoSbased systems analyzed, with permissionless systems having an overall larger energy footprint. Third, we point out that the type of hardware that validators use has a considerable impact on whether PoS blockchains' energy consumption is comparable with or considerably larger than that of centralized, non-DLT systems.