The Jaw Dropping Energy Difference Between PoS Altcoins and Bitcoin

How green is crypto really? Activists accuse the industry of dangerous side effects for the environment, but how true are these claims? What is the environmental impact of crypto?

A new report from UCL addresses these questions and more, alongside an exclusive interview.

Mining costs

The alleged environmental costs of Bitcoin and cryptocurrency are a perennial thorn in the side of the industry. Prominent actors often dispute controversial claims, but crypto enthusiasts are quick to dispute the most extreme claims.

Studies from reputable scientific agencies repeatedly say that mining harms the environment, and this sentiment turns into a political anti-crypto sentiment. However, news reports ignore society's best efforts, and exaggeration is rampant.

How can one understand all this? How much are crypto environmental impact fees and how severe are they?

To help answer some of these questions, BeenCrypto conducted an exclusive interview with Wes Geisenberger, VP of Sustainability and ESG at Hedera, a decentralized public ledger and stablecoin issuer. The company aims to stand out from its Web 3 competitors in terms of carbon footprint and sustainability.

Interestingly, Hedera is a partner of the UCL Center for Blockchain Technology, whose new reports on crypto's environmental impact cast doubt on the proof-of-stake model.

PoW or PoS

A new UCL report centers on the notion that proof-of-stake (PoS) blockchains are more environmentally friendly than proof-of-work (PoW).

PoW protocols like Bitcoin are completely trustless and decentralized, and transactions are verified by a network of competing miners. These equations, solved by the collective computing power of miners, improve the blockchain and generate new coins, but different miners have an inherently adversarial relationship.

For PoS protocols like Ethereum, however, blockchain processes transactions differently. By using validators instead of miners, creators of a new block need to “hold” their own tokens instead of computing power, allowing for a more collaborative experience. This is said to make the mining experience more efficient.

Read More: Proof of Work and Proof of Stock Explained.

According to PoW advocates, the main drawback of the latter system is that it is too prone to centralization. However, UCL's new report seeks to examine these claims more closely.

Are all PoS blockchains created equal? If these protocols are greener than PoW, how green are they? What are the best ways the industry can address these challenges?

As for Geisenberger, the whole place is “responsible for understanding the world around us and especially the environment.” He added, “We need to measure our impacts in terms of standards and easily comparable, like the rest of the financial and technological world. That needs to be extended to better understand the impact of technologies, treasuries and how users use their resources to make a positive impact.”

Such perspectives are critical if the crypto ecosystem is to have an impact on our natural ecosystems.

Bitcoin garbage

Some of the most bitter debates on crypto's environmental impact center around the first and largest cryptocurrency Bitcoin. Debates over Bitcoin often take place over well-trodden territory: How much of the mining's electricity is renewable? Are techniques like flaring gas extraction green energy or not?

Bitcoin's biggest advocates are quick to point out all the huge green energy use cases that literally drive the industry. Hydroelectric operations can sell excess power during periods of low demand, making efficient use of clean energy that would otherwise go to waste. Flared gas extraction is the same, an inevitable product of the petrochemical industry finding new uses.

Aren't Bitcoin's critics eager to paint its impact in the most alarming light possible? That may or may not be true, but UCL proves that even the most beautiful picture is still pretty awful.

The data shows that Bitcoin stands head and shoulders above all PoS blockchains in terms of electricity consumption. The study concluded that “all PoS-based DLTs (distributed ledger tokens) analyzed have low energy consumption compared to mainstream PoW blockchains.” To the extent that power consumption can be considered a problem, this is not a problem in any PoS design.

The study lists several limitations in the methodology and fails to identify the root cause of these discrepancies. Still, as Geisenberger puts it, “the forces of action in the industry [are] Created to answer difficult questions about added regulatory and voluntary disclosures in carbon accounting.

Various organizations are addressing these and other questions, and their results contribute to greater scientific understanding.

Looking ahead

After all, environmental impact in the industry is a highly contentious issue, and bad faith actors only make it worse. Both pro and anti-crypto advocates can twist meanings and misinterpret research, especially for obvious political purposes.

Proponents of PoW have issues in addition to environmental factors that further complicate the issue. If PoS blockchains are not truly decentralized, does it matter if their energy consumption is low? If PoW consumes otherwise “wasted” energy, are the high costs negated?

The crypto community has had to wrestle with these and other questions for years. Fortunately, with the innovative spirit and dedicated researchers like UCL, we are confident we can rise to the challenge.