It is inevitable to ask questions about blockchain technology to understand how it works and determine how you can best use it to your advantage. Perhaps one of the nagging questions you have is about blockchain’s energy efficiency.
It’s commonly stated that some blockchain networks consume as much as 64 TWh (terawatt hours) of electricity, more than the 58 TWh that Switzerland needs annually to power the entire nation.
The assumption is that by employing blockchain technology in your business, you contribute to this energy consumption and its environmental impact.
This belief is misleading, as it ignores the issue of the particular blockchain’s productivity in relation to its electricity consumption or its efficiency.
This infographic will contextualise blockchain’s energy usage by discussing approaches that can enhance its efficiency.
Blockchain is an economy of scale
Operating a blockchain hinges on the concept of economy of scale. To operate at all, a blockchain network requires the infrastructure to process transactions securely. This infrastructure consists of powerful and sophisticated hardware and software, and consumes a volume of electricity necessary to run the protocol and publish new blocks to the network at set intervals.
In this sense, a blockchain network is comparable to a transport infrastructure, such as a railway that runs according to schedule. Ergo: the train will leave the station whether the coach is empty or full of passengers, consuming the same amount of electricity regardless of its load.
An efficient system requires that the platform accommodate the maximum number of people to reach each train’s optimal capacity. That way, the energy consumption is divided by the number of people benefiting from the service.
Similarly, blockchain infrastructure can economise on electricity consumption by fitting as many transactions as possible into each block to make the mining process more energy efficient.
Not all blockchains are alike
Statements about blockchains’ energy usage tend to calculate it based on a small number of transactions, assuming a volume of four to seven transactions per second. Some blockchains can’t scale beyond this level, which indeed makes them highly energy inefficient.
By contrast, the BSV blockchain is at least 2,000 times more efficient, recording a transaction throughput of 5,124 transactions per second (at block height 686127)—and it keeps growing. As the BSV blockchain starts scaling towards 4,000,000 transactions per second, the platform will serve as infrastructure to process high volumes of transactions that can power big data applications.
Blockchain vs the financial industry’s energy use
It’s a misconception that BSV blockchain is only ideal as a business solution in the financial industry, either as a store of value or a medium of exchange. The truth is that every sector handling data can also use blockchain to manage its operations.
That’s practically every industry imaginable, including supply chains, ERP, accounting systems, healthcare apps, and so on. Most of these applications require handling and storing data across interconnected systems, making them energy intensive.
Regardless of a blockchain’s potential use cases, the energy costs of the particular infrastructure remains stable, simply becoming more efficient as it delivers more value.
In comparison, the global electricity consumption of the banking system is estimated to be 263.72 TWh per year; this is in stark contrast to the 113.89 TWh of energy that blockchain networks consume.
Based on these figures, it’s clear that the value blockchain can deliver stretches far wider than the financial industry, however ubiquitous it might be.
Duplication of blockchain infrastructure vs. single, global blockchain
When Satoshi Nakamoto described the blockchain archetype in a 2009 white paper, he depicted it as a single, global infrastructure that would scale to serve an unlimited number of blockchain applications.
Today, most blockchains implementations have run afoul of the archetype:
- By building countless separate blockchain infrastructures, the cost efficiency, scalability, and security of an interoperable system are lost.
Blockchain’s popularity has led to numerous platforms being built using proprietary technologies. Imagine each Internet provider launching its own Internet protocol. Instead of just opening a browser and having access to all of the online content, providers would have to build a vast array of patches and integrations between these protocols.
- By implementing private blockchains, companies are replicating private ledgers and their shortcomings.
‘Private blockchains’ – just like company ledgers – hinge around a central authority, with the flaw of a central point of failure – whether it’s the manipulation of data by an internal party or a hacker.
- By competing to reinvent blockchain’s core design, multiple protocols now exist, bringing back the siloed data approach.
Standardisation of protocols is difficult in multiple blockchain ecosystems. That means if you have an existing business application on a particular blockchain and decide to transfer it to a new setting or environment, you’ll have to plan for extensive data migration activities.
Staying true to Satoshi Nakamoto’s ideals, BSV blockchain is on track to deliver the stability, security, and scale to serve the entire data economy’s demands. One blockchain, millions of applications—this is the foundation on which BSV’s platform is established.
Blockchain infrastructure can be hosted remotely
Blockchain infrastructure doesn’t have to exist on site where space is limited and energy costs are set. Even though large volumes of hydropower or other green energy sources are only available in certain locales, it can be utilised by remote blockchain mining operators providing services to enterprises across the globe.
Blockchain incentivises energy efficiency
Mining involves using the proof-of-work (POW) algorithm to validate transactions so they can be added as new blocks to the blockchain.
Since POW expends significant amounts of energy, incentivising energy efficiency is crucial. The more you can reduce the cost outlay of the blockchain processing infrastructure, the more profitable it becomes. Simply put, miners can maximize their profit by exploring alternative forms of low-cost electricity.
A study by Galaxy Digital Mining reports that oil fields account for almost 40% of the global energy supply, but they also produce greenhouse gases like methane. To mitigate this harmful effect, several companies decided to turn that waste into assets by collecting methane by-products and using them as a source of energy in blockchain mining farms.
Consumption of electricity vs. production of value
Every industry consumes energy as part of its operations, but the question is whether the value it produces justifies the financial and ecological costs.
As record-breaking tests have demonstrated, BSV can fully support the throughput required for IoT, big data, and enterprise use-cases. Here are some fast facts and stats that prove the benefits that BSV blockchain offers from economic and ecological perspectives.
- By 2024, 83 billion endpoints may exist all over the world. A host of IoT devices that create all kinds of opportunities to gather data can be monetised and create incentives for people to participate in environmental campaigns or advocacies.
- The BSV blockchain is designed as a global system that transmits billions of data points at breakneck speed, making it the perfect solution for a data-driven economy. As such, BSV is already developing devices that will scale data outputs from “big” to “extreme” along with the evolution of the Internet protocol and its infrastructure
Besides its tremendous and evolving data capacity, BSV also supports high transaction volume, fast processing, and low transaction fees (data transmission fees). This scalability enables developers to build creative data applications that use micropayments and generate high transaction volume.
- Multinational businesses and entire supply chains will be able to run their data systems via the protocol and infrastructure of the BSV blockchain.
The Green Blockchain
Like all industries, blockchain consumes energy. The more important question is whether an industry or an industry application justifies their environmental impact.
The BSV blockchain which is scaling with the data-driven economy without increasing energy consumption as it does so significantly increases its efficiency and reduces its environmental impact.
BSV is in the lead as green blockchain, with its focus on harnessing the smart future sustainably and profitably using infrastructures and protocols that can provide the required 4S in the blockchain: speed, security, scalability, and sophistication.
To learn more about what the BSV blockchain is and why it’s the infrastructure for the data economy, download our eBook here.