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Ethereum Energy Consumption Index

To develop this project, we use Polygon blockchain, which uses the infrastructure and security systems of Ethereum, the most used and reliable blockchain, but with reduced costs. In fact, for everything that is written on a block of the chain, a fee must be paid for people who validate transaction.

Since September 2022 Ethereum and Polygon change their validation system from the so called classic “proof of work” chain such as bitcoin to the innovative “proof of stake” that allows the use of much less energy-intensive machinery. So far, energy consumption drastically dropped making Ethereum one of the most promising blockchain in line with our business principles.

In particular, as a result of this change, there’s no longer a network of energy-intensive mining devices competing with each other in order to create the next block for the underlying blockchain anymore. Instead, wealth plays a key role in the block creation process that makes use of PoS. Coins are locked up as collateral in the staking process (i.e. put “at stake”), in which the software then randomly selects a “staker” to create the next block for the blockchain. Regardless of whether a network runs PoW or PoS, creating the next block for the blockchain will provide the creator with a reward, but in PoW the chance of obtaining this reward could only be increased by employing more energy-hungry devices. PoS may only incentivize acquiring a higher stake to increase the odds of creating a new block, but the computational power of the underlying device is not relevant to this process. A participating device may still have to meet some requirements (e.g. storage capacity or bandwidth), but improving specifications will not yield more rewards.

On the following figure, it is possible to see the annual energy consumption of proof of work (80-90 TWh/Year) and proof of stake system (0.01 TWh/Year) from September 2022.

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