Cambridge will start tracking Ethereum energy data alongside Bitcoin
While crypto moves so fast it can feel like an eternity ago, Ethereum’s transition from proof-of-stake to proof-of-work is still generating fresh research into the energy consumption of blockchain networks – most recently from the University of Cambridge.
The Cambridge Center for Alternative Finance (CCAF), best known for its Bitcoin energy consumption dashboards and research at Cambridge Judge Business School, unveiled its Cambridge Blockchain Network Sustainability Index (CBNSI) on Wednesday.
The tool explores the environmental implications of the merger while comparing Bitcoin to Ethereum – the two largest cryptocurrencies by market capitalization. It also represents the organization’s attempt to publish dashboards for proof-of-stake networks.
Bitcoin and Ethereum once relied on a proof-of-work mechanism to validate transactions, where computers continuously crunch complex calculations in hopes of winning tokens as rewards. But last summer, finally Ethereum transfered to proof-of-stake, where transactions are verified by actors who have pledged tokens to a network, often in the form of staking.
While the Ethereum Foundation was quick to say that the transition did Ethereum 99.95% more energy efficientaccording to CCAF research, the energy consumption of Ethereum dropped by 99.99% after the merger.
Using height as an analogy, the research compares the current energy usage of Bitcoin with Ethereum, both before and after the merger.
If Bitcoin’s energy use was represented by Malaysia’s Merdeka 118, the second tallest building in the world at 679 meters, Ethereum’s energy use before the merger would be the London Eye at 135 meters – around five times smaller. To continue the analogy, CCAF writes that the post-merger Ethereum network can be represented by a raspberry, or 1.5 centimeters.
However, researchers noted that power consumption does not fully describe the network’s carbon footprint. It fails to capture the greenhouse gas emissions associated with its computing power, the researchers wrote.
The tool marks the latest research produced under the Cambridge Digital Assets Program (CDAP), a research initiative organized by CCAF in partnership with organizations such as the International Monetary Fund (IMF), according to a blog posts. The initiative is also carried out in collaboration with a few solid financial institutions, such as Fidelity, Goldman Sachs, Invesco, Mastercard and Visa.
The tool also provides energy estimates for Bitcoin and Ethereum that are updated daily. At each network’s current rate, the index estimates Ethereum’s annual power consumption is 5.8 gigawatt-hours compared to around 132.2 terawatt-hours for Bitcoin.
The energy consumption of blockchain networks has been a contentious topic for years. And the conversation around Bitcoin’s carbon footprint has heated up in the past month, after a uncover on Bitcoin mining of New York Times and an artwork supported by Greenpeace entitled “Skull of Satoshi.”
When the Cambridge Electricity Index for Bitcoin was released in 2019, the researchers from Cambridge acknowledged that the measure of Bitcoin’s energy use was a “best guess”, explaining that it is difficult to measure reliably due to constant fluctuations.
Similarly, the artist behind the “Skull of Satoshi” said the energy consumption conversation around Bitcoin is not black and whiteafter engaging in conversations with people who believe that Bitcoin mining supports the demand for greener sources of power and helps give purpose to what would otherwise be wasted energy.
