EOS', Ripple's Networks Consume Far Less Energy Than Bitcoin and Ethereum's Blockchain

  • Bitcoin (BTC) and Ethereum (ETH) use the energy intensive proof-of-work (PoW) consensus mechanism.
  • Delegated proof-of-stake (DPoS) based EOS network requires far less energy to function and Ripple's XRP-powered network also consumes very little energy.

The EOS platform, which aims to facilitate the horizontal and vertical scaling of decentralized applications, reportedly consumes significantly less energy than the proof-of-work (PoW) based Bitcoin (BTC) and Ethereum (ETH) blockchain networks.

Bitcoin Network Consumes The Most Energy

According to GenerEOS, an Australian EOS block producer, the Bitcoin network consumes approximately 73.1 TWh of power annually - which is about as much energy consumed by the South American country of Argentina.

At present, there is no accurate estimate of how much power the Bitcoin network will consume in the future, however, its consumption rates have increased considerably since last year.

The Ethereum network, which has more functionality compared to Bitcoin as it allows users to issue smart contracts, consumes around 18.96 TWh of energy annually - which is about 25 percent of the power currently required by the Bitcoin blockchain.

Currently, Ethereum’s native token, Ether (ETH), is mined via the PoW protocol, however, transactions on Ethereum do not require as much energy to confirm as the Bitcoin network.

Ethereum's Network Could Consume Less Energy After Upgrade 

If and when the Ethereum network is able to successfully upgrade to a proof-of-stake (PoS) based consensus mechanism (Casper), then it is expected to consume even less power than it currently does. That’s because a PoS-based blockchain network does not require the energy intensive process of mining.

Compared to Ethereum and Bitcoin, the EOS network is currently using a lot less power as it’s currently consuming only about 0.0011 TWh of energy annually - which is approximately 66,500 times less than Bitcoin, GenerEOS noted.

According to GenerEOS’s analysis, the reason why EOS consumes less power than Bitcoin and Ethereum is that its delegated proof-of-stake (DPoS) consensus mechanism (called Graphene) does not require as much energy to function.

In order to calculate how much power cryptocurrency platforms consume, GenerEOS used energy statistics from Digiconomist, a website focused on research and “in-depth analysis, opinions, and discussions” on bitcoin and other crypto assets.

DPoS Requires Very Little Energy 

Similar to how basic PoS protocols work, DPoS does not depend on the energy intensive mining process for validating blocks on its network. Instead, the EOS blockchain is managed by electing (or delegating) block producers who are tasked with verifying transactions.

As described by MyCryptoPedia:

With DPoS, witnesses are given a specific time schedule to [validate blocks]. Therefore, the intense competition for the addition of the next block becomes impractical, which in turn reduces the energy costs for adding a single block when compared to PoW.

MyCryptoPedia

Other distributed ledger technology (DLT) based networks, such as Ripple Labs’ XRP-powered platform, consumes only about 0.0005361 TWh per year - which is half as much as what the EOS network requires annually.

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Bitcoin Dominance Bump Unlikely to Last — Market Analysis

The entire crypto market seems to be going risk-off and turning to a state of correction, after an excellent start to 2020 throughout January and February which saw significant gains. This is reflected in the brief pop in Bitcoin market dominance. But in the longer term, it’s a different story, and we must always bear in mind the intercourse the conflicting trends of different timeframes – and how they can still agree with each other.

Here, rather than focusing on any specific crypto, we’ll look at the market as a whole using some trusted indicators.

We first look at a small-to-medium-timeframe chart of Bitcoin plus Bitcoin’s market dominance arrayed against the “Others” market dominance, Others being a basket of all altcoins below the top 10. This panoply of charts gives us a broad insight into the whole market.

just some speedbumpsBTC chart by TradingView

During January and some of February, we can see clear risk-taking in the form of a rising altcoin market share. Bitcoin’s price was rising even as its dominance was falling: peak altcoin conditions, where so much buying is coming into the system that more entities are buying Bitcoin than selling Bitcoin for altcoins, even when there is a lot of that.

This pattern has reversed in the past few days, with Bitcoin’s price falling even as its dominance rose, with altcoins being sold back into Bitcoin. The market was overheated in the short term, and people are wisely hedging their profits.

But this trend is unlikely to last. Zooming out and looking at a chart of Ethereum/Bitcoin and both dominance charts again (with Ethereum being a general proxy for the altcoin market), we see a different story.

the bigger picture says the opposite thingETH chart by TradingView

There is a lot going on here. First we can note that Ethereum – again, bearing in mind its role as a general proxy for altcoins – has retaken a very important inflection line that it lost during 2019, the dotted line. It is likely, based on this line retaken last week, that Ethereum is starting a long term uptrend against Bitcoin – and that altcoins in general will do the same in the long term.

Moving to the Bitcoin dominance display in the middle panel, we see an agreement of the above thesis. Bitcoin’s dominance has fallen below its own critical level, namely the area near and above 70%, which BTC held for a while during 2019. This level had not been held since 2017, when Bitcoin put in its all-time-high – and it now looks to be trending steadily away from it again.

This trending away will again provide the space for altcoins to grow in market share, and we have already seen the beginning of this trend during 2020. Perhaps what we have seen was only ‘Round One’.

And moving below to the Others dominance, we see that this indicator has, yet again, taken an important level of 6% and is likely trending away from it. This is the same message in reverse: this level was first tickled during the first real altcoin mega-rally, in the beginning of 2017, and stayed above it for years. It was lost for a time in 2019, about the same time Bitcoin retook its level of 70%.

The larger trends are likely moving in the opposite direction than the shorter ones. Bitcoin's price, based on these indicators, is likely to continue rising even as its market share continues to falls. Altcoins, after years of being battered, are likely to continue gaining market share; and in that situation, the pie can only be getting larger overall.

The views and opinions expressed here do not reflect those of CryptoGlobe.com and do not constitute financial advice. Always do your own research.

Featured Image Credit: Photo via Pixabay.com