Algorand, Cardano, Ethereum 2.0, Hedera Hashgraph, Polkadot, and Tezos were compared, with researchers from UCL’s Centre for Blockchain Technologies (ULC CBT) considering how second-generation consensus models such as Proof-of-Stake perform when compared with their predecessors (such as Proof-of-Work).

Dr. Paolo Tasca, executive director at UCL CBT explained: “At this point, the benefits of Proof-of-Stake are well-recognised and understood in the blockchain space. However, through this research we have found that not all Proof-of-Stake networks are created equally. This is something that both investors and adopters need to be wary of when selecting their network of choice. While it’s fantastic to see that Ethereum 2.0 will be Proof-of-Stake, looking at these results it’s clear that we need to remain vigilant of its potential environmental impact.”

By formalising a “basic mathematical consumption model for validator-based Sybil attack resistance schemes,” the energy consumption per transaction based on common input variables could be quantified. The study ultimately discovered that the energy needs of (varying) consensus protocols is dependent on the number of active validators.

As the scale of DLT networks increase, the report concludes that networks must remain focused on environmental friendliness. The quality of hardware used by node operators and the effect of different design choices within DLT architecture must be considered through the lens of the environmental impact they can incur.

The report’s conclusion reads: “The increasing popularity of DLT systems since the invention of Bitcoin, and with it the energy-intensive PoW consensus mechanism, has produced a variety of alternative mechanisms. PoS is a particularly popular alternative that is commonly assumed to be more energy efficient than PoW.

“In this paper, we tested this hypothesis using a mathematical consumption model that predicts expected energy consumption per transaction, as a function of network load. Applying this model to six different PoS-based DLT systems supports the hypothesis and suggests that their energy consumption per transaction is indeed at least two to three orders of magnitude lower than that of Bitcoin.

“Furthermore, we discover significant differences among the analysed PoS-based systems themselves. Here, a permissioned system was found to consume significantly less energy per transaction than permissionless systems. This difference could be attributed to gatekeeping capabilities offered by permissioned systems.”

Dr. Leemon Baird, co-founder and chief scientist at Hedera Hashgraph, commented: “This UCL study underscores the importance of the work we are doing to create a more sustainable future for the blockchain and distributed ledger industry, and is another fantastic validation of the efficiency of Hedera Hashgraph’s technology. We designed the hashgraph algorithm with efficiency in mind, and are proud to attest that we have brought to market the most environmentally effective public distributed network in the world.

“Other studies have already demonstrated that Hedera’s network uses orders of magnitude less energy per transaction than Bitcoin and Ethereum, and now thanks to this UCL research, we know that Hedera also outperforms other leading Proof-of-Stake networks in terms of environmental efficiency.”

Baird added that the company recently announced its achievement of being 100% carbon neutral through the quarterly purchase of carbon offsets (with amounts determined by the third-party assessment provider Terrapass).

He explained that that the decision to undertake these offsets was made by the Hedera Governing Council, of which UCL is a member, and “further demonstrates our commitment to being the most sustainable decentralized ledger for the digital economy.”

The London School of Economics also joined the Hedera Governing Council last month. On being welcomed to the Council, LSE’s Dr Carsten Sorensen, associate professor (reader) in digital innovation, Department of Management, stated: “Joining the Hedera Governing Council provides a significant step forward in extending our research collaboration and knowledge sharing of digital transformation. In doing so, we aim to significantly extend our research footprint in understanding how DLT and blockchains can play a positive impact on society in pioneering digital sustainable projects.”