Ethereum blockchain produced equivalent of Honduras’ annual emissions before upgrade – study

LONDON: The Ethereum blockchain’s historical greenhouse gas emissions before a major software upgrade last year were equivalent to the yearly emissions of Honduras, a University of Cambridge study showed on Friday.

Blockchains – the digital ledgers that underpin cryptocurrencies – typically consume large amounts of energy as they produce coins and process transactions, drawing criticism from environmentalists and some investors.

Yet calculating the environmental impact of the crypto sector is fraught with difficulty, given its relative opacity and lack of centralised data.

Global leaders and delegates from nearly 200 countries are gathering for the COP28 climate summit in Dubai, with how to maximise energy efficiency in industry among questions on the agenda.

In September 2022, the Ethereum blockchain – which hosts the world’s second biggest token ether – underwent a major software upgrade known as the “Merge,” which drastically reduced its energy usage.

From its launch in 2015 until the Merge, Ethereum’s greenhouse gas emissions totalled 27.5 million tonnes carbon dioxide equivalent (MtCO2e), the study showed. Honduras emitted 27.7 MtCO2e in 2020, according to Climate Watch.

Under its post-Merge system, Ethereum uses over 99 per cent less energy, developers say. Its current yearly emissions are around 2.8 kilotonnes carbon dioxide equivalent, the study found – around the same as five round-trip flights from London to New York.

It is generally thought that blockchain is “a highly emitting technology,” said Anna Lerner, executive director at the Ethereum Climate Platform, an organisation that seeks to use blockchain tech to accelerate climate finance. “Ethereum has shown that it doesn’t have to be such a polluter,” she said.

The study is among the most thorough examinations of Ethereum’s historical emissions, its author, Alexander Neumueller, research lead for digital assets climate impact at the University of Cambridge, told Reuters.

Bitcoin, in comparison, creates about 73.9 MtCO2e a year, Neumueller said, based on its daily emissions in November 2022.

The annual emissions of Bitcoin, the largest blockchain and cryptocurrency, are therefore roughly equivalent to those of Cambodia in 2020, according to Climate Watch.

Crypto tokens such as bitcoin and ether remain primarily an investment tool, with little widespread practical usage in business or commerce.