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  • Writer's pictureSam Joel

Does cryptocurrency use a lot of energy?

Updated: Mar 3


Blockchains and Cryptocurrencies such as Bitcoin indeed use a lot of energy. According to the Cambridge Bitcoin Electricity Consumption Index Bitcoin uses more electricity than countries such as Bangladesh, Columbia, and Austria:



Interestingly though, the amount of energy being used by blockchains and cryptocurrencies such as Bitcoin when compared to the amount of energy being used by the existing banking system could be up to 60 times less according to Michael Khazzaka


 

Of course, Bitcoin is not the only blockchain and cryptocurrency. There are thousands of blockchains and cryptocurrencies each of which has completely different energy usage and requirements. Further, not all blockchains and cryptocurrencies function in the same way and the technology is rapidly advancing leading to reductions in energy usage without loss of efficiencies. So, for example, recently the Ethereum blockchain's cryptocurrency ETH switched from "proof of work" to "proof of stake" to complete its transactions on the network. This one change significantly reduced the amount of energy used by the Ethereum blockchain global network.

 
"One of PoS’s greatest strengths is that it uses energy very efficiently. According to the Ethereum Foundation, the current Proof-of-Work system consumes roughly 5.13 gigawatts on a continuous basis, whereas the Proof-of-Stake system consumes only 2.62 MW, or about 99.95% less energy."

Since Ethereum switched to Proof of Stake, we can now see that the network's energy usage when compared with popular web applications such as Netflix and YouTube is substantially less:


 

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