In Defense of Proof of Work

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2022-05-13 10:00:05

Many share the conviction that proof of work mining is a relic of the past, that the future of blockchain lies with its competitor, proof of stake. Here, I will attempt to rebuke some of the criticism that proof of work faces and argue why it is here to stay.

Proof of work mining is a process where participants perform computations on computer hardware in order to win the lottery that it is finding the next block and thus to get a reward in the form of newly printed coins. The faster your hardware can compute, the more lottery tickets you get. The mining usually takes place on specialized hardware and the mining process, like all other computations, consumes energy. One of the main political attacks that are currently being waged against proof of work blockchains is of the energy that the mining process consumes. Several estimates put the yearly energy consumption of blockchain mining at around 100 terawatt hours To put this into context, this mining process consumes about 15 % less energy than the country of Norway. This raises two questions that we will address:

The significant amount of electricity consumed by the mining process does not in itself emit CO2. Only if the electricity comes from non-renewable sources does the mining cause CO2 emmissions. In the electricity sector as a whole, 27.7 % of the globally produced electricity comes from renewable sources, according to BP Statictical Review 20211, but for the electricity used to mine Bitcoin, this number is between 59 % and 74 %. So although Bitcoin mining consumes a lot of energy, this energy is significantly less CO2 intensive than the average electricity production.

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