Cambridge Centre for Alternative Finance (CCAF) is set to unveil a new height to track energy consumption. The change aims to align with Ethereum’s usage that has shifted from London Eye to Raspberry upon the merger completion.
Tracking Energy Data in Ethereum Network
The change is paramount, considering Ethereum ditched the proof-of-work for proof-of-stake (POS). The shift triggered a fresh assessment of energy consumption within the blockchain networks, as the University of Cambridge illustrated.
CCAF is living up to the reputation for the Bitcoin energy consumption dashboards backed by exceptional Cambridge Judge Business School research. Such is evident in the unveiling of the Cambridge Blockchain Network Sustainability Index (CBNSI) on April 26.
CBNSI comprises a tool applicable in exploring the implications of the Ethereum merger on the environment relative to Bitcoin being the top-ranking crypto from their market capitalization.
The index is set to become the channel for representing the entity’s entry in dashboards meant to publish the proof-of-stake networks.
Ethereum Merge Delivers Energy Efficiency
Similar to Ethereum, bitcoin leveraged the proof-of-work (POW) mechanism to validate transactions. Such applied when the computers continually handled complex calculations to win tokens as a reward.
Last summer, the second-ranked Ethereum transitioned to POS, empowering actors to verify transactions. The actors involved comprise holders of tokens pledged to the network through staking services.
The Ethereum Foundation has in the past indicated successful transitions approximated to yield energy efficiency exceeding 99.5%. The high energy efficiency was collaborated in a CCAF research that revealed that Ethereum’s energy consumption levels plunged 99.99% following the merge.
CBNSI analogizes height to assess the current energy usability levels of Ethereum and Bitcoin before and after the merge. CCAF considers bitcoin utilization to mirror the Merdeka 118-storey building in Malaysia, projected at 679 meters. Consequently, the pre-merge energy utilization could match the London Eye with a height of 135 meters. While Ethereum usage is five times smaller, CCAF likens the post-merge energy consumption levels within the Ethereum network to a Raspberry of 1.5 centimeters in height.
Difficulty of Revealing Carbon Footprint via Electricity Consumption
The CCAF researchers observed that tracking electricity consumption hardly reveals the carbon footprint within a network. The researchers acknowledge that energy consumption cannot capture greenhouse gas emissions attributed to computing power.
The tool constitutes the latest research approach undertaken within initiatives formulated by the Cambridge Digital Assets Programme (CDAP). CDAP involves a research project that CCAF hosts in partnership with the International Monetary Fund (IMF).
The CDAP initiative features the collaborative input of several financial institutions, including Fidelity, Invesco, Visa, Mastercard, and Goldman Sachs. Their involvement in the program acknowledges conventional financial players’ desire for virtual assets.
The tool is set to illustrate energy estimates on Bitcoin and Ethereum one can update daily. The CBNSI index approximates the annualized consumption level of Ethereum at 5.8 gigawatt-hours, trailing Bitcoin’s 132.2 terawatt-hours.
The Cambridge Judge Business School acknowledges that energy consumption levels for blockchain networks are often contentious. The ambiguity on the parameters to include and exclude has dominated present conversations, particularly when estimating the carbon footprint.
Contentious Debate on Measuring Bitcoin Energy Consumption
Recently, a conversation involving Bitcoin energy consumption turned heated following disagreements that occurred in March 2023. The debate relates to the expose executed by New York Times in a Bitcoin mining report. Greenpeace would replicate the US media through its report titled Skull of Satoshi.
Previously, Cambridge had in 2019 admitted that the release of the electricity index to track Bitcoin power was challenging. The researchers confessed that constant fluctuations made the assessment of Bitcoin’s energy utilization a mere guess and difficult to measure reliably.
The Skull of Satoshi artist admitted that the debate surrounding energy consumption on Bitcoin is a gray conversation. From experience in the debates, the artist observes that bitcoin mining constitutes an activity demanding greener power sources. It gives purpose to salvage what would translate as wasted energy.