This is a more detailed version of introductory article I wrote at ethereum.org
After eight years of proof-of-work mining, Ethereum finally became green on 15th September 2022. It did so by swapping out proof-of-work mining for a new proof-of-stake based consensus mechanism, using ETH instead of energy to secure the network. Ethereum's proof-of-stake mechanism now uses just ~0.0026 TWh/yr across the entire global network.
CCRI (Crypto Carbon Ratings Institute) generated bottom-up estimates of the electricity consumption and the carbon footprint of the Ethereum network (see the report). They measured the electricity consumption of different nodes with various hardware and client software configurations. This yielded an estimate of 2.601 MWh (0.0026 TWh) for the network’s annual electricity consumption (September 2022), which corresponds to yearly carbon emissions of 870 tonnes CO2e applying regional-specific carbon intensity factors.
The chart above shows the estimated annual energy consumption in TWh/yr for various industries (retrieved in June 2022). Note that the estimates presented in the plot are from publicly available sources that have been linked to in the table below. CEBCI refers to the Cambridge Bitcoin Electricity Consumption index. The values are illustrative and do not represent an official estimate, promise, or forecast.
To put Ethereum's energy consumption in context, we can compare annualized estimates for other industries - this allows us to better understand whether 0.0026 TWh is a lot or a little. The data is summarized in the bar chart above, but more detail is provided in the table below:
Estimates of YouTube's energy expenditure have also been broken down by channel and individual videos. Those estimates show YouTube used over 175 times more energy watching Gangnam Style in 2019 than Ethereum uses per year.
It is complicated to get accurate estimates for energy consumption, especially when what is being measured has a complex supply chain or deployment details that influences its efficiency. For example, we have included an upper and lower estimate for gold mining that differ by about 90 TWh. Estimates of energy consumption by Netflix range dramatically depending on the source. Their own self-reported estimates are about 20x smaller than an independent estimate - there is some discussion about the reasons for this on Carbon Brief. Similarly, YouTube has been estimated to expend about 244 TWh/yr, although the energy consumption depends a lot on the type of device videos are streamed on, and the energy-efficiency of underlying infrastructure such as data centers - suitable values for these parameters are hard to estimate so there is substantial uncertainty.
The chart above also includes comparisons to Bitcoin and to Ethereum when it used proof-of-work. Estimates for Bitcoin's energy consumption vary widely between sources and it is a topic that attracts a lot of nuanced debate about not only the amount of energy consumed but the sources of that energy and the related ethics.
Many articles estimate "per-transaction" energy expenditure for blockchains. This can be misleading because the energy required to propose and validate a block is independent of the number of transactions within it. A per transaction unit of energy expenditure implies that fewer transactions would lead to smaller energy expenditure and vice-versa, which is not the case. Also, per-transaction estimates are very sensitive to how a blockchain's transaction throughput is defined, and tweaking this definition can be gamed to make the value seem larger or smaller.
For example, on Ethereum, the transaction throughput is not only that of the base layer - it is also the sum of the transaction throughput of all of its "layer 2" rollups. Layer 2's are not generally included in calculations, but accounting for the additional energy consumed by sequencers (small) and the number of transactions they process (large) would likely drastically reduce per-transaction estimates. This is one reason why comparisons of energy consumption per transaction across platforms can be misleading.
Ethereum's energy expenditure is very low, but this has not always been the case. Ethereum originally used proof-of-work which had a much greater environmental cost than the current proof-of-stake mechanism.
From the very beginning, Ethereum planned to implement a proof-of-stake based consensus mechanism, but doing so without sacrificing security and decentralization took years of focused research and development. Therefore, a proof-of-work mechanism was used to get the network started. Proof-of-work requires miners to use their computing hardware to calculate a value, expending energy in the process. Ethereum's total energy consumption peaked during the apex of the crypto bull market in February 2022 at just under 94 TWh/yr. Just before the switch to proof-of-stake, the energy consumption was closer to 78 TWh/yr, comparable to that of Uzbekistan, with a carbon emission equivalent to that of Azerbaijan (33 MT/yr).
CCRI examined the impact of Ethereum’s transition from proof-of-work to proof-of-stake. The annualized electricity consumption was reduced by more than 99.988 %. Likewise, Ethereum’s carbon footprint was decreased by approximately 99.992 % (from 11,016,000 to 870 tonnes CO2e). Depicted metaphorically, this corresponds to a reduction in emissions from the height of the Eiffel Tower to a small plastic toy figure, as shown in the figure above. Therefore, the environmental cost of securing the network is drastically reduced. Simultaneously, the security of the network is thought to have increased.
Under proof-of-stake, PoW puzzle-solving is not necessary. Miners are replaced by validators who perform the same function except that instead of expending their assets in the form of computational work, they stake ether as collateral against dishonest behavior. If the validator is lazy (offline when they are supposed to fulfill some validator duty) their staked ether can slowly leak away, while provably dishonest behavior results in the staked assets being "slashed". This strongly incentivizes active and honest participation in securing the network. This disincentive structure allows for network security with proof-of-stake while eliminating the need to expend energy on brute-force computations. Detailed explanations of the network security under proof-of-stake can be found here and here.
The hardware arms race that incentivizes PoW miners to consistently upgrade their hardware to more and more energy-hungry systems is removed under PoS. Validators can participate with normal home computers or even low power devices such as Raspberry Pi. This removes a significant barrier to entry and widens participation in securing the network. However, there is still a substantial cost to becoming an Ethereum validator - the minimum stake is 32 ether.
While Ethereum's energy consumption is very low, there is also a substantial, growing, and highly active regenerative finance (ReFi) community building on Ethereum. ReFi applications use DeFi components to build financial applications that have positive externalities benefiting the environment. ReFi is part of a wider "solarpunk" movement that is closely aligned with Ethereum and aims to couple technological advancement and environmental stewardship. The decentralized, permissionless, and composable nature of Ethereum makes it the ideal base layer for the ReFi and solarpunk communities.
Web3 native public goods funding platforms such as Gitcoin run climate rounds to stimulate environmentally conscious building on Ethereum's application layer. Through the development of these initiatives (and others, e.g. DeSci), Ethereum is becoming an environmentally and socially net-positive technology.
With a blockchain as a backend, circular, less wasteful economies can be established using, for example NFTs and global markets to connect buyers and sellers, or preventing double-spending of carbon offsets.
It would also be interesting to explore the possibility of an offsetting scheme where major organizations in the Ethereum ecosystem repaid the existing Carbon debt by gradually buying tokenized carbon credits or investing in scaling carbon removal technologies. A quick back-of-the envelope calculation suggests around $30,000,000 would make Ethereum whole with respect to its carbon expenditure at a price of $1.67 per Tonne.
Earlier in this article, Ethereum’s energy expenditure was compared to other industries, such as gold mining, data centres and platforms such as Youtube. However, unlike the industries it was compared to, Ethereum is not one thing - it is a means for decentralising anything in a secure, trustless, provable way. Pricing in DAOs, NFTs, DeFi, DeSci, ReFi, public goods funding, web3 and a whole host of other applications, all at a minimal energy cost seems like a clear win for PoS Ethereum.
PoW chains undeniably expend a huge amount of energy. Supporters of PoW argue that this energy expenditure is what gives the network security and is therefore necessary. Proof-of-work is more Lindy than proof-of-stake today. The counter-argument is that at least equal but likely stronger security can be derived from proof-of-stake based consensus, so the energy consumption is a choice, not a necessity for securing a chain.
Some proof-of-work proponents have argued that access to energy is more decentralized than access to capital to stake, but the counter-argument is the centralizing power of hardware escalation - most mining is done by industrial players that can afford to benefit from economies of scale and frequent hardware upgrades that individuals can’t access.
There have also been several arguments in favour of proof-of-work stimulating investment in renewable energy, load-balancing energy-producers and incentivizing capture of “stranded” energy that would otherwise be wasted. These arguments feel quite hollow because a) the truly green option is not burning the energy at all; and b) if the energy would otherwise be wasted, it could be captured for some other purpose than mining. Also, there is some twisted logic in the “stimulating research” argument - it really boils down to “I will do bad thing X so that people research ways to stop people doing that same bad thing X”.
In the end, the issue always reduces down to an individual choice about whether the energy expenditure is worth it. Someone arguing the libertarian point of view might suggest that proof-of-work mining is absolutely justified because the energy is being spent in service of incorruptible hard money which increases individual freedom, and anyway only individuals and markets should be able to determine whether a particular use of energy is justified. Others could argue that proof-of-stake doesn’t require large amounts of energy to be consumed in the first place and is therefore ethically superior.
It is important to note that part of the reason why Ethereum was able to switch its security mechanism from PoW to PoS is because the ether token has both economic value and liquidity. Otherwise, a malicious actor would have little to lose by defrauding the network (i.e. sufficient stake to take control of the network could be bought cheaply) and penalties would be inconsequential. While it is easy to demonise proof-of-work in favour of low-carbonproof-of-stake, arguably, the only reason ether has value and liquidity is because a real-world commodity (energy) has been expended in the past. That value is now baked into the token making it a viable asset to stake. Ethereum’s higher carbon past has enabled its low carbon future.
At the end of the day some people believe the energy expenditure required to secure a PoW chain to be worth it, others don’t.
Ethereum was an aspirant PoS chain since its inception. However, it turned out to be a major technical challenge. This is because the Ethereum developer community refused to compromise on security, scaleability and decentralization. Initially, the roadmap was divided into phases, with scaling by sharding the blockchain happening before the merge to PoS. However, the rapid development of layer 2 “rollups” allowed Ethereum to scale sufficiently that the merge was brought forwards in time, before sharding. New software clients had to be developed from the ground up to deal with the new security and consensus mechanisms. The community had to buy in to the idea by staking their ether in a deposit contract, even without a fixed date for withdrawals being enabled (i.e. staked ETH was locked until some unknown point in the future). Then, the new client implementations had to be extremely rigorously tested. This process took several years.
While Ethereum's energy consumption has historically been substantial, there has been a major investment of developer time and intellect into transitioning from energy-hungry to energy-efficient block validation. To quote Bankless, the best way to reduce the energy consumed by proof-of-work is simply to "turn it off". Ethereum did that in September 2022, reducing its energy consumption by >99.98%.
Ethereum Emissions: A Bottom-up Estimate Kyle McDonald
Ethereum Energy Consumption Index – Digiconomist
Sources for the energy estimates in the graph and table presented earlier: