Networks
Depending on the type of network or currency (e.g., Layer 1, Layer 2, or tokens) and the involved consensus mechanism, we rely on different methodologies. The following gives an overview of our methodologies to derive sustainability metrics for cryptocurrency networks.
Consensus Mechanisms
- 💰 Proof of Stake (PoS)
- ⛏️ Proof of Work (PoW)
- 🔄 Other Algorithms
CCRI has written a detailed paper on how to determine the electricity consumption and GHG emissions of PoS networks.
Our methodology consists of five steps to generate data on the electricity consumption and GHG emissions of a PoS system:
- Analyze PoS network and hardware requirements: we examine the PoS network and its minimum hardware requirements to select appropriate hardware for measuring single-node electricity consumption.
- Estimate single node electricity usage: we run the network's client software on all hardware devices in our lab, measure the electricity consumption of each device while running the network, and collect additional data points such as CPU utilization and processed blocks. Given our measurement and the transaction throughput, we establish a model to estimate a node's electricity consumption based on the number of transactions.
- Estimate network electricity consumption: we collect information about the size of the network, validator node count, and transaction throughput, then multiply the transaction-based best-guess estimate of a single node's electricity consumption by the number of validator nodes in the network.
- Estimate GHG emissions: we use country-specific emission intensities to calculate a network-specific emission intensity if data on the location of the network's nodes is available, and rely on the world average emission intensity if no information on the regional distribution of the nodes in the network is present.
The founders of CCRI have written numerous scientific papers on the matter, e.g., "Revisiting Bitcoin's Carbon Footprint", "Energy Consumption of Cryptocurrencies Beyond Bitcoin", and "The Carbon Footprint of Bitcoin".
Our methodology employs hashrate and suitable mining devices to estimate the electricity consumption and GHG emissions of PoW cryptocurrencies.
- Determine the cryptocurrency's hashrate: we calculate the hashrate of the PoW cryptocurrency by observing the block times and the mining difficulty.
- Identify the Proof-of-Work algorithm and mining devices: depending on the algorithm, we identify the most suitable mining devices for the respective algorithm, such as ASIC-based devices for Bitcoin or GPUs for Monero.
- Estimate rated power and electricity consumption: we leverage data from WhatToMine and their historical hardware efficiencies to determine a balanced mix of devices for the cryptocurrency, and derive the rated power and electricity consumption by determining how much hardware is required to produce the hashrate.
- Estimate GHG emissions: we use geolocation data from Bitcoin miners as a proxy for all PoW mining, as the incentive schemes are similar, and estimate the GHG emissions by considering the energy mix of the regions where the mining devices are located and the overall electricity consumption of the network.
Depending on the algorithm, either existing methodologies can be leveraged (e.g., the PoS methodology can be used for dPoS and others) or novel methodologies are required. As soon as we leverage new methods, we will display them here.
Network Type
For Layer 1 networks, we simply apply the methodology as outlined above. For Layer 2 networks, tokens, and rollups, we use a combination of their own layer and their responsibility on the base layer. How we calculate the individual responsibility of activities such as holding or transacting crypto is explained in Allocations.