Proof-of-stake blockchains – not all are equal

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New research has investigated the energy consumptions of leading proof-of-stake consensus distributed ledger technologies.

Bitcoin regularly makes headlines for its high energy consumptions, which is encouraging miners to turn to renewable energies and other initiatives to improve sustainability.

It also is encouraging blockchain developers to consider the energy consumption in their implementations with a notable example being Ethereum, which is transitioning from a proof-of-work to a proof-of-stake consensus mechanism (Ethereum 2.0).

Proof-of-stake, in which validators must stake to participate offers the potential for improved energy efficiency, particularly as the blockchain is scaled and the transaction throughput is proposed to increase to potentially tens of thousands per second.

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But new research from the University College London reveals marked differences in the energy consumption of different proof-of-stake blockchains. Of the six investigated all were found to have consumption at least three orders of magnitude lower than Bitcoin and a similar level of difference also was found between the best and worst-performing.

Of the worst Ethereum 2.0 was calculated under different modelling assumptions to range from 0.01823-0.55713kWh/tx under a low throughput projection, while Hedera, which has attracted interest for central bank digital currencies among other use cases, was the best with 0.00002-0.00004kWh/tx.

Scaled up for global use, Ethereum 2.0 also was the biggest energy consumer on 1,010.6-30,887.5kW compared with Hedera at 3.5-6.9kW.

“At this point, the benefits of proof-of-stake are well-recognised and understood in the blockchain space,” Dr Paolo Tasca, Executive Director at UCL’s Centre for Blockchain Technologies says.

“However, through this research, we have found that not all proof-of-stake networks are created equally. This is something that both investors and adopters need to be wary of when selecting their network of choice.”

He also advises remaining vigilant of the potential environmental impact of Ethereum 2.0.

Notably, the figures for proof-of-stake are close to those of traditional centralized payment systems such as VisaNet, suggesting the potential for even undercutting these in the future.

The researchers attribute the differences between the different technologies mainly to the number of validators – but without suggesting an effective centralisation with their reduction – indicating the need to consider design choices.

They also note the need for a suitable selection of validator hardware and suggest standardised recommendations are put forward to help operators in selecting the most energy-efficient hardware configuration.

Among energy sector blockchains, Power Ledger recently migrated from Ethereum to Solana, which was not included in the study and utilises proof-of-history as well as proof-of-stake. Energy Web Chain utilises a permissioned proof-of-authority consensus on Ethereum.