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In contrast, transactions on Tezos consume 0.0016 kWh or less than the energy required to charge the Apple Tablet for 10 minutes. 100 Tezos transactions are equivalent to a Tesla Model 3 driving 10 kilometers. The energy use of the entire Tezos network is approximately equivalent to the annual energy use of two households in the United States. However, one question is, once Ethereum transitions to Eth2, how will competing blockchains such as Tezos, Polkadot, and Solana perform in the market.
According to Cointelegraph Research The most energy-efficient blockchain with irreplaceable tokens (NFT), the Ethereum network currently uses more energy than Costa Rica uses throughout the year. From this perspective, a single transaction on Ethereum uses about 30 kWh, which is equivalent to powering a house for a whole day in the United States. 100 Ethereum transactions are equivalent to driving a Tesla Model 3 for approximately 390 kilometers. However, the upcoming transition of Ethereum to Eth2 will make this all the better.
Blockchain energy consumption has been heatedly debated. Although NFT exists on multiple blockchains, the new research report only compares the energy consumption of the two chains. Energy consumption is directly related to the consensus mechanism of the blockchain, where Ethereum stands for Proof of Work (PoW), and Tezos is used as an example of Proof of Stake (PoS).
Download the full report here, including charts and infographics.
The results show that, compared with alternative PoS chains such as Tezos, the Ethereum blockchain is much more energy intensive. In 2021, transactions on Tezos are more than 35,000 times more energy efficient than transactions on Ethereum.
When solving the problem of energy consumption, it is first necessary to distinguish between transaction costs and network maintenance costs. Naturally, PoW systems like Ethereum will consume more energy than PoS blockchains like Tezos.
Debate between PoW and PoS
The PoW blockchain network relies on a large number of individual miners who contribute to the hashing power of the network to ensure network security. So, for example, the energy consumption of Ethereum is not directly related to the number of transactions. Each transaction only contributes a small amount to the total energy consumed.
However, when comparing energy consumption across blockchains, it needs to be measured by an index that measures the range of network usage. Therefore, the total energy consumption is divided by the number of transactions executed by the network in a day. For Ethereum, the total energy consumption is the product of the average daily hash rate and the estimated hardware efficiency. Finally, for comparability, the results are annualized.
For Tezos, a slightly different strategy is adopted because the energy consumption in the PoS network does not depend on the hash rate. The calculation boils down to the total daily energy consumption and multiplying it by the number of active representatives—that is, the number of active bakers multiplied by the daily energy consumption of the bakers.
The results support previous findings about the huge difference in energy consumption between PoW and PoS blockchains. It can be estimated that in August 2021, creating an NFT on Tezos is roughly equivalent to using a hair dryer for two seconds, while creating an NFT on Ethereum is equivalent to more than 20 hours of use.
About efficiency
At present, when comparing PoW and PoS blockchains, the energy efficiency of the Ethereum blockchain is not as good as the PoS alternative, leaving aside potential security issues. Therefore, compared with less energy-intensive alternatives, casting NFT on Ethereum seems less environmentally friendly. However, Ethereum’s switch to the PoS algorithm may result in a significant reduction in energy usage, which will make the situation better.
This article is for reference only and does not represent investment advice, nor does it represent an invitation to invest in analysis or to buy and sell financial instruments. Specifically, this document is not a substitute for personal investment or other advice.
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