Kadena: Green Proof-of-Work
In the five years since the Paris Agreement on climate change, it's reported that 60 of the world's biggest banks have provided $3.8 trillion (£2.7 trillion) to fossil fuel companies — not very planet-friendly. One report found that 49% of financial institutions don't analyze how their portfolio impacts the climate. Then there's the sector's electricity use. Cryptocurrencies can run without the oversight of large financial institutions, the banking sector is built upon a massive amount of infrastructure, which naturally burns through a great deal of electricity.
Banks themselves use plenty of computers and servers, as well as thousands of air-conditioned offices and fuel-guzzling vehicles. It isn't easy to estimate precisely how much non-renewable energy is required to support all this activity. Still, one recent report found that the banking system consumes more than twice the electricity that bitcoin does.
The biggest misconception in crypto is that Proof-of-Work WASTES energy.
Miners harness vast computing power to secure a Proof-of-work network. All Bitcoin miners combined use massive energy: by some estimates, as much as the country of Chile, which has led to charges of energy waste.
Something "wastes" energy only to those who think it serves no proper function. The Bitcoin network secures $1 trillion in value and serves millions of people, including many without access to traditional payment networks. Miners often colocate to abundant and free power, which usually means renewable hydroelectric or geothermal sources. Today at least 39% of Bitcoin mining is powered by renewable energy. Miners are aware of the scrutiny they might face and are increasingly using renewable energy. It also takes a lot of energy to run USPS, Facebook, and the U.S. Military. Proof-of-work's carbon footprint is undoubtedly a problem that requires a solution. But it doesn't mean Proof-of-work is a bad idea. Instead, that carbon footprint is an implementation challenge Kadena has overcome by scaling Proof-of-Work.
While unscalable Proof-of-work (BTC, ETH/ETC, LTC, DOGE) is rightly getting a battering for its excessive energy consumption, there should ultimately be a need for all our financial systems to be green and sustainable. Banks can do this by reconsidering their portfolios and working towards net-zero carbon emissions. But cryptocurrencies offer a different path to greener finance — and coins like $KDA that concentrate on their environmental credentials may well clean up crypto’s reputation for excessive energy use.
Kadena Scalable Proof-of-Work is Energy Efficient.
While blockchains using PoS argue that PoW isn't sustainable, the most critical factor contributing to PoW's energy efficiency is the transactions per second (TPS). No matter what the TPS capability is, one day you will hit it, unless you don’t have one like Kadena. This proves the argument that PoW-driven blockchains are unable to provide mining solutions that are energy efficient is not accurate. During the blockchain boom, while most players in the industry opted for the high energy efficiency promises PoS mechanisms offered, Kadena focused its efforts on scalability and dedicated its time to building a scalable and efficient underlying blockchain solution, Chainweb.
PoS blockchains might appear to be better for the environment on the surface, but upon closer inspection, they pose multiple security problems due to their lack of scalability. PoW appears to use more power initially, but it can be greener and more secure than PoS-based blockchains. The future is cheap renewable energy and scalability.
Using energy per transactions metrics is invalid.
The following data is from https://digiconomist.net/, a website seeking to sensationalize and antagonize PoW. Let's look at their information on power attributed to a single BTC or ETH transaction.
Using a single transaction as a metric to measure power consumption for decentralized systems is inherently flawed. Transactions have nothing to do with energy consumption. If you remember anything from this medium, let it be that energy consumption per transaction isn't a thing for blockchains, it means even less on a smart contract platform like Kadena, where transactions don't all have the same block usage. A DeFi swap is more intensive than a transfer and creating a new account is less intensive than a transfer. Transaction efficiency has to do with the engineering of the underlying protocol.
It's the miners participating in the network that affect energy consumption. Doug Beardsley, Director of Engineering at Kadena, explains it well here.
More miners in the network mean more security and decentralization, which is a good thing. However, since these energy per transaction metrics exist we can use them too! This will only further prove Chainweb's transaction efficiency over legacy systems, unscalable Proof-of-Work protocols, and Proof of Stake protocols.
Power attributed to 100k Visa transactions
The electrical cost of 100,000 Visa transactions is 149 kWh — Bitcoin network average energy consumption per transaction compared to VISA network as of 2020, Statista
Year-ending September 2020 they processed 140,839,000,000 transactions — Visa financials report Q4 2020
Power attributed to 100k ETH 2.0 transactions
These calculations are from Ethereum themselves. It's estimated that ETH 2.0 will allow 64 times the amount of transactions today, which sits at around 15 transactions. That's the number of shard chains (extra data and capacity) being introduced.
That means we can estimate how long it will take to process 100k transactions so we can compare it to the Visa example above.
- 15 * 64 = 960 transactions per second.
- 100,000 / 960 = 104.2 seconds to process 100k transactions.
Ethereum boldly claims ETH 2.0 will reduce power consumption by 99.5% even though it doesn't exist yet. This would make the daily usage of ETH 2.0 the following:
1.44kWh daily usage * 10,000 network nodes = 14,400kWh per day.
There are 86,400 seconds in a day, so 14,400 / 86,400 = 0.16kWh per second.
In 104.2 seconds, the Ethereum network will use the following amount of energy: 0.16kWh * 104.2 = 17.36 kWh can be attributed to 100k ETH 2.0 transactions.
That is 11.65% of the energy consumed by the same amount of transactions on Visa.
Power attributed to 100k KDA transactions.
Kadena can push Chainweb to 100k transactions per second and beyond. This will be a groundbreaking speed and make it the only scalable PoW blockchain to exist. Compared to PoS, which can sometimes slow down block production to a screeching halt, Chainweb is a much faster and environmentally friendly protocol.
We can estimate how much power is attributed to Chainweb processing 100,000 transactions to compare it to the Visa and ETH 2.0 examples above.
We can estimate the daily usage of the network by estimating the power all miners in the network use in one day.
54kWh KD5 daily usage * 1450 approximate miners = 78,300kWh consumed per day.
In 1 second, the Kadena network will use the following amount of energy:
86,400 seconds in a day, 78,300kWh/ 86,400 = 0.9063 kWh
Therefore we can attribute 0.9063 kWh per 100k KDA transactions to an expanded Chainweb.
0.9063 kWh is .6040% of the energy consumed for the same amount of transactions on Visa and 5.3896% for ETH 2.0. Chainweb wins. Comparing Chainweb's efficiency to the power we can attribute to ETH and BTC per 100k transactions would be negligible, annual power consumption is a better comparison (but still tiny).
BTC, ETH, and KDA Annual Power Consumption
Bitcoin currently uses 172.28 TWh per year. Ethereum currently uses 77.5TWh. We can estimate Chainweb's annual consumption:
54kWh KD5 daily usage * 1450 approximate miners= 78,300kWh consumed per day.
78,300kWh consumed per day x 365 days in a year= 0.028 TWh
Current Kadena miners will consume approximately 0.028TWh in one year. That's 0.016% of BTC's and .036% of ETH's annual power consumption. Even if the KDA miners double or triple throughout the next year, the annual power consumption of KDA would still be tiny compared to BTC and ETH.
Since Chainweb has successfully scaled Proof-of-work, not only does it have 30x the throughput of ETH and almost 100x the throughput of BTC, but it is also a greener alternative. There are no compromises in security or decentralization. Scalable Proof-of-Work does not waste energy. Compared to processes such as gold mining or oil production, Proof-of-Work mining hardly consumes power. Proof-of-Work mining for cryptocurrencies like Kadena is not a waste. These unique systems are the future of the world economy to create decentralized money, free from governments, for an inclusive and fair financial system.
