On the Technology that monoco.io Utilizes and its Impacts on Energy Consumption
Proof of Work (POW) and Its Environmental Impact
The Proof of Work1 Protocol is the first and the foremost reliable working principle regarding blockchain technology. It is a mechanism that depends on a reward incentive system in return for solving the cryptographic puzzle (brute-forcing). Thus, the system’s security and sustainability are made possible through a method built on power consumption. POW mechanism is only sustainable through the incentive of the units that contribute to the system (the miners) minting new crypto assets (bitcoin) and then gaining these minted assets consequently. As the popularity of this mechanism has risen and become more widespread, its energy consumption also increased and still is increasing proportionally. With that, its adverse effects on the environment have become a prevalent topic of discussion regarding eco-sustainability.
Proof of Stake (POS) as an Alternative to Proof of Work
While the miners are rewarded for their contributions to the system based on their energy consumption with the Proof of Work protocol; with Proof of Stake (POS)2, the owners are able to register as many assets into the Ethereum platform as they want and then stake them to earn the role of a validator. Essentially, via POS, the contributing parties are able to become a part of the incentive-service mechanism through investing. To put it simply, the Proof of Stake incentivizes the stakeholders with the same amount of earnings as the amount of investment they’ve made. Should the stakeholder intentionally disrupt any transactions, the data written into the blockchain would entail the risk of losing the total amount of investment they have made with their status as a validator. Consequently, Proof of Stake can be described as an algorithm that incentivizes the investor to only validate correct information.
The sustainability and the security of the system is guaranteed through the investment of stakes into the system, rather than a number of puzzles to be solved with electric power. Therefore if the Proof of Stake is used as an alternative to the energy-dependent Proof of Work protocol, there would be a 99.95% decrease in energy consumption. The related calculations can be reviewed via the article available on the Ethereum Foundation website, which can be found below the table of references.
What Technology Does monoco.io Use?
monoco.io works on Ethereum network. Ethereum currently operates via PoW protocole, which depends on electric power.3 However, for many years the Ethereum Foundation has been working on a new, energy-recovery-capable version (ETH 2.0), titled Serenity. Although they haven’t been able to announce an exact date, it is expected to go live in the first quarter of 2022. The user tests for the new version are already underway. And looking at the positive figures of power-incentivized miners who willingly switch to the new version, it’s possible to say that the transition will not take that long. Hopefully, in the near future and in the long run, monoco.io will be using a system that is exempt from 99.95% of the current existing blockchain technology power consumption.
monoco.io works on Ethereum network. Ethereum currently operates via PoW protocole, which depends on electric power.
The Energy Consumption in Numbers
Generally, when we talk about the energy consumption of blockchain technology, we must keep certain things in mind.4 The PoW model’s mining-incentivized energy consumption has an undeniably negative impact on the environment. Even on the Ethereum network, a single transaction has the same carbon footprint as 187.060 transactions on VISA (which can complete 4000 transactions a second), or the same footprint as viewing 14.067 YouTube videos. However, we now see that the power necessary for bitcoin mining is provided by most investing companies by funneling their idle energy consumption into mining equipment, in addition to many organizations being enthusiastic about using renewable energy sources as they also provide another source of earnings for themselves. The most recent example of this would be El Salvador, accepting bitcoin as a national currency and utilizes the energy produced through the volcano within their borders to make up for the energy needed to mine bitcoin. These are reminders that there have been considerable steps taken towards offsetting and preventing the damage done by PoW, which is the most developed safety model. It is claimed that NFT trade platforms on the current systems have consumed the same amount of power in total (31 TWh) as all of Nigeria consumes in an hour. We read about French digital artist Joanie Lemercier pulling her work which had been minted as NFTs off the market. But we also see another artist, Damien Hirst, criticizing NFTs for the same reasons, while he still accepts bitcoin – a cryptocurrency that will make no concessions about its use of PoW – as a payment method.
It is claimed that NFT trade platforms on the current systems have consumed the same amount of power in total (31 TWh) as all of Nigeria consumes in an hour.
It must first be remarked that, due to the constant turnover of miners, it is difficult to measure exactly what the carbon footprint of the Ethereum network on the PoW model is. However, the important thing for us is the power consumption estimates for the next version of the network, which is already taking the steps to switch from the PoW model. Regarding those figures, Carl Beekhuizen, an R&D specialist for the Ethereum Foundation, wrote in an article dated May 18th, 2021:
“How much power does it take to run a beacon node (BN), 5.4 validator clients (VC), and an eth1 full-node? Using my personal setup as a base, it’s around 15 Watts. Joe Clapis (a Rocket Pool dev) recently ran 10 VCs, a Nimbus BN, and a Geth full node off of a 10Ah USB battery bank for 10 hours, meaning that this setup averaged 5W. It is unlikely that the average staker is running such an optimized setup, so let’s call it 100W all in. Multiplying this with the 87k validators from before means that home-stakers consume ~1.64 megawatts. Estimating the power consumed by custodial stakers is a bit harder, they run tens of thousands of validator clients with redundancy and backups. To make life easy, let’s also just assume that they use 100W per 5.5 validators. Based off of the staking infrastructure teams I have spoken to, this is a gross over-estimate. The real answer is something like 50x less. In total, a Proof-of-Stake Ethereum therefore consumes something on the order of 2.62 megawatts. This is not on the scale of countries, provinces, or even cities, but that of a small town (around 2100 American homes).” 5
It is largely estimated that a blockchain that runs on the PoS model would consume, in order to serve globally, around 2.62MW of power, which is around the same amount as approximately 2100 private residences in the United States. Meanwhile, monoco.io web applications will not even run a validator client—the smallest element on a PoS network—and therefore its carbon footprint must then be calculated based on transactions rather than equating it to the energy consumption of a complete blockchain system. And another note: The project will be tried on different blockchains in future dates as part of its development process, and the project will not only invest in international carbon footprint reduction programs but play an active role.
- “Glossary.” Bitcoin. Accessed October 10, 2021. https://developer.bitcoin.org/glossary.html#term-POW.
- “Proof-of-Stake (POS).” ethereum.org. Accessed October 10, 2021. https://ethereum.org/en/developers/docs/consensus-mechanisms/pos/#what-is-pos.
- “Ethereum Energy Consumption Index.” Digiconomist, December 30, 2021. Accessed October 10, 2021. https://digiconomist.net/ethereum-energy-consumption.
- LaBarre, Suzanne. “Why NFTs Have Such a Massive Carbon Footprint.” Fast Company. Fast Company, April 9, 2021. Accessed October 10, 2021. https://www.fastcompany.com/90623849/why-nfts-have-sucha-massive-carbonfootprint.
- Beekhuizen, Carl. “Ethereum’s Energy Usage Will Soon Decrease by ~99.95%.” Ethereum Foundation Blog, May 18, 2021. Accessed October 10, 2021. https://blog.ethereum.org/2021/05/18/country-power-no-more/.