Public blockchain and distributed ledger technologies have ushered in a new era of the web — we now have infrastructure that enables programmatic trust in online environments between individuals, organizations, corporations, and governments. Nearly every industry is primed to benefit from this technology, including financial services, healthcare, social networking, supply chain, sustainable energy, and more. It’s akin to the transformational power of the internet that we’ve seen over the past 25 years.
Emerging technologies force us to consider the adverse effects they might have on our world if left unchecked. Artificial intelligence, for example, begs for considerations of privacy and surveillance, bias, and moral judgment. Or social networks, which must reckon with the adverse effects on society through misinformation, personal data marketplaces, and surveillance capitalism. With the increased adoption of public distributed ledgers and, more specifically, proof-of-work mining currently used by both Bitcoin and Ethereum, the industry is obligated to consider the imminent threat of unsustainable energy consumption and environmental consequences.
The Hedera network’s underlying technology, the energy-efficient hashgraph algorithm and proof-of-stake consensus mechanism, have laid a solid foundation for sustainable network operations relative to alternative layer 1 networks and even the VISA network. But the Hedera Governing Council recognized that more could be done.
Hedera has adopted environmental sustainability as a core value and is officially committed to carbon-negative network operations by purchasing carbon offsets quarterly, with amounts determined by the third-party assessment provider Terrapass. This decision was made by members of the Hedera Governing Council after careful deliberation, and they are hopeful this decision serves as inspiration for other public networks to adopt sustainable operating practices.
Calculating quarterly offsets for network operations
To offset network operations, Hedera purchases "green-e climate certified" credits measured in metric tons. By purchasing more metric tons of offsets than the prior quarter, Hedera ensures its carbon-negative status.
As a tangible example, Hedera network operation emissions for Q2 2021 were 20 metric tonnes of CO2. According to the EPA’s greenhouse gas equivalency calculator, that amount of CO2 is equivalent to 4.3 gasoline-powered passenger vehicles being driven for one year.
The emissions included in this assessment stem from all public-facing infrastructure, as found on https://status.hedera.com/ as of 08/05/2021; this includes:
Mainnet nodes (21 nodes)
Testnet nodes (6 nodes)
Previewnet nodes (6 nodes)
Mainnet mirror node APIs (REST & HCS gRPC) (4)
Testnet mirror node APIs (REST & HCS gRPC) (2)
Assessments are calculated based on the power consumption of several network nodes and are conservatively extrapolated across all nodes on the Hedera networks. This calculation takes into consideration the growth of network nodes and increasing real-world application transactions on the Hedera mainnet, of which the Hedera network has recently surpassed Ethereum.
Based on the Hedera network’s current throughput of 2,572,467 transactions per day, the average amount of energy consumed per transaction is 0.00017 kWh (estimated to .0000205494552 kgCO2). In comparison, the average Bitcoin transaction consumes 1,736.85 kWh, producing 825.00 kgCO2. And the average Ethereum transaction consumes 133.88 kWh, equating to 63.59 kgCO2 produced. We anticipate Ethereum’s energy consumption to be reduced in v2, upon transitioning to proof-of-stake.
Hedera’s energy use will continue to grow as additional nodes are added, and carbon offsets will be purchased quarterly to account for this growth. However, Hedera is capable of far greater transaction per second throughput than currently experienced (10k TPS throttled), and transaction growth will result in a decrease of average per-transaction energy consumption. Today, Hedera is performing the equivalent of over 10,000,000 transactions and 788,000 transactions for the same amount of energy it takes Bitcoin and Ethereum to process 1, respectively.
Avg. txns per day (citation 1, 2, 3)
kWh (citation 4, 5, 6)
kg CO2 (citation 7)
Times less efficient
An application ecosystem that protects our ecosystem
Many Hedera Governing Council members and independent application developers alike are choosing the Hedera network as their public ledger of choice for environmental, social, and governance (ESG) application use cases. The Hedera network combines sustainable energy consumption, high throughput, low fees, and stable, decentralized governance to deliver an unmatched experience for companies and projects looking to participate in the space.
Council member Électricité de France (EDF) has cited their intention to use the Hedera Token Service and the open-source Guardian ESG marketplace framework to build a tokenized carbon offset marketplace:
“The Hedera Token Service (HTS) is one innovation we look forward to leveraging, to deploy a carbon offset and credit system on Hedera, in line with our overarching mission.” said Gilles Deleuze, Principal Researcher, Systems Risk Assessment at EDF R&D “Additionally, we will be exploring other use cases that leverage the technological advantages of speed and security that Hedera DLT brings.”
And independent applications building on the Hedera network, such as DOVU and Tymlez, have made it clear that Hedera is unmatched when it comes to sustainably tokenizing carbon offsets and making verifiable all documentation related to carbon sequestration projects.
Foundational requirements when evaluating public distributed ledger technologies
Individuals, businesses, and governments will increasingly rely on DLTs for decentralized identity, transfer of value, and verification of data. Utility, efficiency, governance, and predictable fees are critical deciding factors during the evaluation phase, from both a bottom-line business and architectural perspective. Hedera and its network service offerings have proven to meet the needs of web3 application use cases and go beyond by ensuring its network infrastructure is environmentally friendly.