Sustainability of bitcoin and blockchains

Abstract

Bitcoin is an electronic currency that has become increasingly popular since its introduction in 2008. Transactions in the bitcoin system are stored in a public transaction ledger ('the blockchain'), which is stored in a decentralized, peer-to-peer network. Bitcoin provides decentralized currency issuance and transaction clearance. The security of the blockchain depends on a compute-intensive algorithm for bitcoin mining, which prevents double spending of bitcoins and tampering with confirmed transactions. This 'proof-of-work' algorithm is energy demanding. How much energy is actually consumed, is subject of debate. We argue that this energy consumption currently is in the range of 100-500 MW. We discuss the developments in bitcoin mining hardware. We also briefly outline alternative schemes that are less energy demanding. We finally look at other blockchain applications, and argue that also here energy consumption is not of primary concern.

Blockchain Technology in Business and Information Systems Research

“…Further, there is a need to understand the ecological implications of powering an expanding network of compute ability required to sustain blockchains. For example, mining bitcoins requires a surprising and ever-growing amount of energy (Vranken 2017). Subsequently, we see a need to study the potential effects of the technology on the distribution of wealth, prevailing social arrangements, and geopolitical balance.…”

Banking on Blockchain: Costs Savings Thanks to the Blockchain Technology

“…However, both works do not discuss about the limitations that hinder a widespread usage of the blockchain technology in the banking system. In addition, we can cite the work by Vranken [8], who focused on the estimation of the power usage of the Bitcoin network, considering four families of mining hardware. He concluded that the order of magnitude of the energy power is 100 MW.…”

ResilientDB

“…PoW requires limited communication between replicas, can support many replicas, and can operate in unstructured geo-scale peer-to-peer networks in which independent parties can join and leave at any time [81]. Unfortunately, PoW incurs a high computational complexity on all replicas, which has raised questions about the energy consumption of Bitcoin [31,91]. Additionally, the complexity of PoW causes relative long transaction processing times (minutes to hours) and significantly limits the number of transactions a permissionless blockchain can handle: in 2017, it was reported that Bitcoin can only process 7 transactions per second, whereas Visa already processes 2000 transactions per second on average [79].…”