The Energy Consumption of Blockchain Technology: Beyond Myth
Business & Information Systems Engineering volume 62, pages 599–608 (2020 )Cite this article
When talking about blockchain technology in academia, business, and society, frequently generalizations are still heared about its – supposedly inherent – enormous energy consumption. This perception inevitably raises concerns about the further adoption of blockchain technology, a fact that inhibits rapid uptake of what is widely considered to be a groundbreaking and disruptive innovation. However, blockchain technology is far from homogeneous, meaning that blanket statements about its energy consumption should be reviewed with care. The article is meant to bring clarity to the topic in a holistic fashion, looking beyond claims regarding the energy consumption of Bitcoin, which have, so far, dominated the discussion.
Blockchain technology entered public awareness with its first application, the cryptocurrency Bitcoin (Nakamoto 2008), which was established in 2009 and currently exhibits a market capitalization of more than 100 billion USD. In the last decade, blockchain technology has developed significantly and is now implemented in a wide range of scenarios, including Ethereum or Hyperledger Fabric, which allow distributed platforms to function with unprecedented versatility (Lockl et al. 2020). Consequently, many researchers and practitioners have realized that blockchain technology holds disruptive potential beyond its use in cryptocurrencies (Beck 2018; Fridgen et al. 2018a; Labazova et al. 2019). Generally speaking, blockchain technology permits secure transactions to be made without the involvement of intermediaries, and is, therefore, appealing to individuals as well as to industry and the public sector. However, Bitcoin still dominates many people’s perceptions of blockchain technology. Moreover, it is well-known that Bitcoin consumes an enormous amount of energy (De Vries 2018). (Strictly speaking, we cannot consume energy, but merely change its form from valuable (e.g., electricity) to less valuable (e.g., heat) energy. Nevertheless, we will stick to the common usage of the phrase here.) Consequently, one frequently encounters claims that the energy consumption of blockchain technology in general is problematic (Truby 2018). Considering the current discussions regarding climate change and sustainability, these statements could therefore inhibit or delay the widespread adoption of blockchain technology (Beck et al. 2018).
