PoW Vs PoS Explained

Cryptocurrency. When you ask people about it what do they say? Bitcoin? Ethereum? Coins? Decentralization? Actually, they are all correct, but people miss out on the bigger picture – energy consumption.

Have you ever thought about how many Graphics Cards / ASICS are mining crypto today and how much energy they use? A lot. Bitcoin production is estimated to generate between 22-22.9 million metric tons of carbon dioxide emissions a year. To put that into perspective, Nepal where 30 million residents reside only produced 17.89 million metric tons of carbon dioxide in 2020. The energy consumption used by just mining Bitcoin overtakes even small countries and most major cities. Yes, Bitcoin alone does that.

Ethereum on the other hand is on another level In 2021 alone, each Ethereum transaction produced 103.42 kilograms of carbon dioxide. With more than 460 million transactions on the network in 2021, the carbon emissions for the year amounted to 42.6 million metric tons.

Renewable energy is becoming more popular nowadays, and we are constantly looking for new, creative methods to lessen our carbon footprint. With this in mind, the most popular transition that everyone is looking forward to is Ethereum, currently, Ethereum is proof-of-work.


Proof-of-work or PoW, “One unit of computing power is one vote”- Vitalik Buterin. That might be oversimplifying things as he said in an interview. PoW was originally merely a concept to fight spam emails in 1993; It wasn’t given that name until 1997 when it was officially named “proof-of-work.” And was forgotten until 2009 when Satoshi Nakamoto created Bitcoin. Satoshi Nakamoto utilized this method to protect the Bitcoin blockchain after realizing that it could be used to achieve consensus among numerous nodes on a network. Thus, Bitcoin or BTC was created but not without repercussions.

In order to validate electronic transactions on a network, proof-of-work essentially uses computational power to solve and verify challenging mathematical problems. The more computing power you have, the quicker you can solve these challenging mathematical equations or cryptographic puzzles, and the faster you answer them, the more rewards you receive.

The crucial question is what computational power means in this situation. On June 4th, 2022, the Ethereum network Hashrate peaked at an all-time high of 1.32PH/s, Moreover, according to the Digiconomist, Ethereum uses roughly 112 terawatt-hours of electricity a year, which is more than what Pakistan or the Philippines uses. Bitcoin is much worse, using a staggering 137 terawatt-hours annually.

Unfortunately, there are no international laws for cryptocurrencies in place to minimize and lower these numbers, but blockchain founders have started to address this by switching to PoS, or proof-of-stake.

Proof- of-Stake

Proof-of-stake, or PoS, has been hailed as a more environmentally friendly method of reaching consensus on blockchains since it doesn’t require expensive hardware or a lot of electricity to solve mathematical puzzles, contrasting proof-of-work such as bitcoin.

As mentioned by the Digiconomist “I wouldn’t call PoS “incredibly energy efficient.” It performs a whole lot better than PoW, but it doesn’t address that blockchain is inefficient by design”. Yes, and it does a whole lot better. In fact, in Ethereum energy consumption is reduced by ~99.95% following The Merge from proof-of-work (PoW) to proof-of-stake (PoS). That’s a great deal of power annually!

But what exactly is PoS and why is it better?

“Essentially one coin is one vote” -Vitalik Buterin

With contrast to PoW, where rewards are obtained by validating transactions, in PoS you are essentially rewarded by collecting transaction fees as the reward. Currently, the major PoS rivals are Cardano (ADA), Solana (SOL), and Algogrand (ALGO), but when Ethereum switches to PoS, a new dominant player will soon appear. This means that Ethereum will reduce its carbon footprint, but it also has implications for all other cryptocurrencies because it represents a significant advancement for the industry.

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Gunther is a hard-core player and game coder who also enjoys creative writing. He has strong opinions, particularly about game design and gameplay.

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