Is there a difference between the CO2 emission of different cryptocurrencies?
Cryptocurrencies are digital currencies that use blockchain consensus mechanisms to secure transactions and control the creation of new units of currency. The production and consumption of cryptocurrencies has a significant environmental impact, mainly due to their electricity consumption.
As a result, cryptocurrency CO2 emission has become a hot topic.
General CO2 emissions of crypto mining
Bitcoin, for example, uses an estimated 197 TWh per year, which is more than the annual power consumption in Ireland. In addition to this, bitcoin mining produces large amounts of electrical waste as it relies on powerful computers that solve complex algorithms to confirm transactions in the blockchain.
In order to reduce its carbon footprint and become more sustainable, there have been several projects aiming at reducing bitcoin’s energy consumption through developing more efficient mining algorithms or by using renewable energy sources such as solar panels or wind turbines.
Why can cryptocurrencies have different sizes of CO2 footprint?
Different cryptocurrencies use different consensus mechanisms. As a result, the CO2 footprint of different cryptocurrencies can vary greatly. For example, the most common consensus mechanism in cryptocurrencies is Proof of Work (PoW).
In PoW, miners are required to solve complex mathematical problems in order to add transactions to the blockchain. This requires a lot of energy and therefore generates a high carbon footprint.
Proof of Stake (PoS), on the other hand, does not require miners to perform calculations. Instead, validators stake their coins on the blockchain by keeping them in a special wallet for a predefined amount of time.
The longer they keep their coins staked, the higher their chances are of becoming one of the next block validators. As a result, PoS has much lower energy requirements and generates less CO2 emissions compared to PoW.
The following graphic compares Bitcoin, Ethereum, and EOS’ energy usage, and therefore the Bitcoin vs. Ethereum carbon footprint:
One Bitcoin transaction uses up 923.03 kgCO2, as of writing, which is equivalent to the carbon footprint of over 2 million VISA. In terms of electrical energy, it takes up nearly 2,000 kWh. In other words, the Bitcoin carbon footprint is extremely high, due to the massive, energy-intensive Bitcoin mining process.
Ethereum, on the other hand, has a much lower energy consumption and generates less CO2 emissions than bitcoin. One Ethereum transaction uses up 192.45 kWh, as of writing. For more, check out a crypto mining calculator that calculates the CO2 footprint from an Ethereum address.
EOS, a cryptocurrency using Delegated Proof of Stakes (DPoS), uses significantly less energy than even the Ethereum blockchain. As such, with the use of renewable energy sources and by implementing more sustainable consensus mechanisms such as Delegated Proof of Stake, cryptocurrencies can be truly green.