Peter Randall, SETL President
11/26/2019

One of the principal arguments in favour of a permissioned distributed ledger installation is that because the participants are bound by a common set of rules and have to accept a negotiated ‘user agreement’ that the complexity of consensus is much reduced. This is because participants can rely on the externally operational certainty and trust generated by the user agreement and do not have to get involved in complex, time consuming calculations to establish trust for each block.

The calculations required to establish consensus in non-permissioned chains are very complex and very large. They also take very considerable amounts of computing power and take a very long time to solve. A direct consequence of the complexity of the calculations and the time taken to undertake them is the amount of electricity that needs to be consumed.

Energy Consumption

It has often been remarked that one of the limiting factors for blockchain’s that operate in the wild is their consumption of electricity. The most definitive source for consumption for the Bitcoin blockchain is the University of Cambridge, Judge Business School ‘Bitcoin Electricity Consumption Index’

The current estimate of the Bitcoin consumption rate is about 72 TWh per annum. That sounds like a lot. To put that into perspective it would take the entire dedicated power output of 4 Hoover Dams to power Bitcoin. Alternatively, it would consume the entire annual output of the world’s largest nuclear power plant, the Kashiwazaki-Kariwa plant in Japan. On the other hand, the world’s largest hydro scheme, the Three Gorges Hydro produces about 220 TWh, which means that Bitcoin processing would take up to one third of this production

On any basis and in any way electricity consumption of this magnitude is both unsustainable and environmentally destructive. And remember this is the power consumption of just the Bitcoin network. Add in all the other blockchains that use a similar consensus method and total power consumption is likely to be larger again. In a world of scarce resources it is unsustainable to dedicate more and more electricity generating capacity just to satisfy the mantra of non-permissioned chains.

According to 2015 statistics published by Amazon, a typical data centre emits about 400 grams of carbon per kilowatt hour. It has been calculated that the 72 TWh of electricity consumed by Bitcoin emits about 2.82 x 10 to the power of 10 kg which is 28,200,000 tonnes of carbon emissions every year. At a carbon offset price of £6 per tonne this would cost £169,200,000 to remediate annually.

SETL Sustainability

SETL, which powers the only regulated distributed ledger in production in the world estimates that to power the distributed ledger it has deployed requires between fifty and sixty KWh per day. On this basis, the non-permissioned Bitcoin blockchain uses about THREE MILLION times the amount of electricity that a working permissioned chain uses. This is clearly sustainable and in fact is a further feature of installing, running and using a permissioned chain is the cost advantages it offers even vis a vis a conventional database. The SETL chain consumes about 22000 KWh per year and at a carbon offset price of £6 per tonne would cost less than £50 to remediate.

It is laudable to want to change the world and extend the boundaries of freedom but the cost to the environment and the misallocation of scarce electricity generating capacity is not a price worth paying for a non-permissioned chain.