Notes on Blockchain Energy Consumption Webinar

Introduction

• Topic: Blockchain energy consumption and its environmental impacts.
• Speaker: Juan Ignacio, Chief of Staff at D Science Foundation.
• Focus: Energy efficiency of proof of stake systems, Bitcoin carbon accounting, renewable energy in mining.
• Engagement encouraged: Questions from participants throughout the webinar.

Structure of the Webinar

1. Context and Importance

   • Discussion of the significant energy consumption attributed to blockchain technology.
   • Examples: Bitcoin's energy consumption compared to entire countries or significant amounts of media consumption.

2. Framework for Sustainability in Crypto

   • Organizing thoughts into four types of crypto asset systems:
     • Proof of Stake Systems
     • Proof of Work Systems (e.g., Bitcoin)
     • Storage-based Blockchains (e.g., Filecoin, Chia)
     • Layer Two Systems (e.g., Polygon, Stablecoins)

3. Key Questions to Address

   • What is the energy use and carbon footprint of crypto assets?
   • How to develop fair and comparable methodologies?
   • Interpreting results and metrics properly.

Contextual Considerations

• Increased scrutiny towards the crypto industry's carbon footprint, especially for Bitcoin.
• Initiatives like Green Peace's "Change the Code" aiming to drive change in Bitcoin's ecosystem.
• Regulatory implications from the EU's Markets in Crypto Assets (MiCA) framework requiring sustainability indicators from 2025.

Energy Consumption Metrics

• Proof of Stake Systems:

  • Simple calculations based on the number of nodes and average energy consumption per node.

• Proof of Work Systems:

  • Focus on mining activity, energy consumption per hash, and total hashes produced.

• Storage-based Blockchains:

  • Energy consumption based on data stored and energy usage per byte.

• Layer Twos:

  • Assessment of the intrinsic and extrinsic energy usage of Layer 2 systems.

Energy Consumption Calculations

1. Calculating Energy Use for Proof of Stake:

   • Average node power usage
   • Total number of nodes
   • Convert total power usage to energy usage (e.g., watt-hours).

2. Calculating Energy Use for Proof of Work:

   • Determine energy consumption per hash and total hashes produced to assess energy consumption.
   • Establishing carbon intensity of energy sources used.

Carbon Accounting Challenges

• Various methodologies for carbon footprint assessment (attributional vs marginal approaches).
• Importance of understanding the source of energy and its carbon intensity.
• Issues with comparability and assessing the impacts of mining activity in different contexts.

Key Lessons Learned

• Many crypto assets have low carbon footprints, but caution is needed in assessments.
• Comparisons between different blockchain types can be misleading; each type has unique characteristics.
• Not all high energy consumption mechanisms warrant a ban; policy recommendations should be nuanced.
• The accounting approach influences perceptions of sustainability and recommendations for improvement.

Conclusion and Next Steps

• Invitation for feedback on additional seminars or topics of interest.
• Open floor for questions from participants.