Is An Energy-Efficient PoW-Based Blockchain Possible?

The emergence of cryptocurrency has disrupted the traditional financial industry and captivated the world while doing so. The decentralization movement does not only prevent fraud, but for those living under authoritarian governments, it can provide a medium of exchange resistant to censorship, giving a crucial means of financial freedom. Although cryptocurrency has been lauded for its technological advancements, it hasn’t come without its moments of scrutiny. In May, Elon Musk decided to stop accepting Bitcoin as payment for Tesla, tweeting that he was concerned about the “rapidly increasing use of fossil fuels for bitcoin mining.” This is because the top cryptocurrencies—including Bitcoin, Bitcoin Cash, and Ethereum—require large amounts of energy consumption to function. In 2020, a report showed that Bitcoin was on track to use more energy than that of 159 countries combined. It’s no wonder that people like Musk are advocating for greener alternatives. Despite the fact that most new technology comes with trade-offs, the issue has sparked a conversation about how blockchains can further move towards environmentally friendly practices. This is where Proof-of-Work (PoW) or Proof-of-Stake (PoS) gets interesting regarding the environmental impact of a blockchain. Both PoW and PoS algorithms can have a direct effect on energy usage. However, PoW is typically known to require a more significant amount of energy since miners need t...