Despite energy-intensive first-generation blockchains, alternatives are being built to support a sustainable future. ARYZE Ambassador, Bilal Kamal, shares his thoughts on the matter.

Mar 25 · 6 min read
Energy intensive blockchain networks may soon be a thing of the past!

The tech space is always on the lookout for ground breaking technologies and innovation. Developers, entrepreneurs and scientists continue to push the boundaries of technology to even greater heights and complexity. Blockchain has become the centre of discussions surrounding emerging technologies and it might not be long before it achieves mass adoption.

Blockchain was unfortunately introduced with cryptocurrencies and therefore has been received by mixed responses. The negative sentiments against cryptocurrencies has been transferred to blockchain. Blockchain has been backlashed by environmental activists lately during the past year for its energy consumption.

The energy consumption depends on the ‘working principles’ of blockchain — consensus, or a system for agreeing that a transaction is valid. The consumption is linked to cryptocurrency mining.

"Extracting a dollar’s worth of cryptocurrency requires up to three times more energy than digging up a dollar’s worth of gold." — Source: RT

However, cryptocurrencies do come in two versions: mineable and non-minable.

Mining involves high-powered computers which solve complex mathematical equations in an effort to validate a block of transactions at the expense of a lot of energy consumption. This principle is called "proof of work".

Many non-mineable cryptocurrencies work on a model called "proof of stake", where the job of validating blocks is shared out based on users’ stakes in the network. There are no high-powered computers and competitions, which means the costs for this method are substantially lower and its energy efficient.

Cryptocurrency is, in fact, just one of the applications that is powered by blockchain technology. Its credibility is hampered by its volatility, which makes it really hard to integrate it to the financial system, which requires much more stability.

Figure 1. Bitcoin energy consumption index chart — Source

The cryptocurrency market cap has exploded the last couple of years and bitcoin mining has followed along. It is quite evident from the figure above, which shows the consumption of electricity of bitcoin mining over the past two years.

Mining becomes more "difficult" and energy intensive as the supply of mineable Bitcoin decreases, making the process more energy demanding.

This next figure shows the scale of the energy consumption. Bitcoin is competing at national level with medium sized countries and it is quite worrying from the point of view that it has few proper use cases, as of yet.

Figure 2. The energy consumption of Bitcoin rivals that Uzbekistan and Romania — Source

Figure 3 shows the scale of the bitcoin energy consumption from another point of view.

Figure 3. If the energy consumed by Bitcoin mining could power a country… — Source

Figure 4 shows the Bitcoin energy consumption compared to another payment system, namely VISA.

Figure 4. Bitcoin consumes more energy by far than the VISA network — Source

As seen from the figure, the energy consumption is gigantic and will not be sustainable at all if adopted on a large scale. As the world is getting more digitalized and governments are trying to shift from traditional paper money to digital money, more users are expected to be added in the long run.

Technology’s impact on the environment is a real-world issue, and often difficult to visualise and estimate.

The estimates of bitcoin and cryptocurrencies energy consumption are also exactly that — mere estimates. Bitcoin and cryptocurrency miners are hoping that, as the world is shifting to renewable energy, a drop in electricity prices will bring about increased profits. As the major expenses of mining is energy, miners tend to concentrate in countries with cheap energy.

China has been the most popular choice. The ongoing coal-based pollutions and carbon footprints have sparked several environmental debates in China.

However, blockchain can also be used in a much more sustainable way where the consumption of energy is minimal while the functionality is maximized.

Sustainable Alternatives

The Hyperledger Project is an alternative and is launched by the Linux foundation, and it aims to standardize and democratize blockchain within the business world, rather than letting companies solve these issues on their own.

Hyperledger will combine cross-industry knowledge to allow enterprise to build customized blockchains that would answer specific needs.

The goal is to develop an open source distributed ledger framework to build robust, industry -specific applications, platforms and hardware systems to support business transactions. As of now, Hyperledger host 12 projects with more than 3.6 million lines of code, with the main two contributors being IBM and Intel.

Hyperledger Fabric is a project driven under the mentoring of IBM. Surprisingly, Fabric is the most widely adopted Blockchain by the biggest enterprises.

With Fabric, different components of blockchains, like consensus and membership services, can become plug-and-play. Fabric is designed to provide a framework with which enterprises can put together their own, individual blockchain network that can quickly scale to more than 1000 transactions per second.

Hyperledger is an Enterprise "Private Blockchain" Platform and does not run on Proof of Work, which is power intensive. Hyperledger validates its transaction using Distributed Ledger Technology. There is no mining as the transactions are ordered by trusted parties that form a “federation”, or the validation nodes on the distributed ledger.

Hyperledger Fabric currently runs on the Kafka consensus, which can be run on normal enterprise-grade servers (can be tested on normal desktop machines too) that neither require any special, demanding or power intensive hardware requirements.

To sum it up, Hyperledger is much more energy efficient and environmentally friendly than the first-generation blockchains. There seems to be no problem for large scale implementation from a sustainability point of view.

Blockchain is a driving force for connecting people and businesses in a transparent and global manner

Blockchain could effectively play a massive role in fostering sustainable development. While blockchain technology is being experimented with across a number of industries, the future is still uncertain, and the power and limitations of this technology is still unclear.

Whether blockchain will empower the world and is the biggest disruptive force since the internet, as some have suggested, remains to be seen. It is binding upon us to make sure is that the technology we are putting effort into and trying to implement has the ability to scale up and meet the demands of the future while being sustainable and reliable.

Article by Bilal KamalARYZE Ambassador

The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of ARYZE.

Bilal Kamal — Photo by Carl Jenster for ARYZE

Bilal is enrolled in General Engineering at DTU with a focus on sustainable energy. After his education, Bilal plans to pursue a career in sustainable engineering, and is already now looking for opportunities in the field. He has joined the ARYZE Ambassador program to strengthen his understanding of emerging technologies and to expand his network.

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ARYZE Official

Developing stable-coins and next-generation digital payment solutions.


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#ARYZE creates digital cash to make payments cheaper, faster and smarter. Join us on Telegram: #thewayyoupay

ARYZE Official

Developing stable-coins and next-generation digital payment solutions.

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