Proof of work is a particularly resource-intensive operation and requires a large amount of energy to make the system feasible, strong and secure. As a result, there has been and still are a lot of debate about the energy requirements of proof of work and whether there is considerable wastage of resources in the mining process. According to an article in CoinTelegraph
, Bitcoin with its proof of work algorithm is using 0.13% of the global energy consumption, which is a non-negligible amount of power. The high use of energy for proof of work is a deliberate strategy to make a blockchain secure and for certain blockchains like Bitcoin, the difficulty keeps on adjusting
every 2016 blocks and it can be argued that the power consumption might increase in the foreseeable future.
However, any analysis on the power consumption of proof of work networks needs to be in relation to what the blockchain is trying to achieve. In the case of Bitcoin, the latter is trying to complement or in some cases replace fiat currencies, and maintaining fiat currencies is also very expensive. Fiat currencies require the printing of money which is a very expensive task in itself
, and require banks and financial institutions to exist and function properly to ensure that money as a medium of exchange and store of value works properly. Most of these costs are either not measurable or very difficult to measure and does not give a true indication of the cost of using fiat currencies.
In absolute sense, it can easily be argued that proof of work consensus algorithms and blockchains like Bitcoin and Ethereum are not working at the expense of the environment, but instead they are implementing groundwork for setting up energy-generating solutions which can be used in the long run for other purposes.