An inefficient use of resources
While much of this energy is consumed by data centers that often use at least partially renewable power, it is clearly an inefficient use of resources from a global energy perspective. If viewed from an energy efficiency perspective, the value in terms of the number of transactions supported is very small compared with the power requirements.
It is not a good property of a currency or asset to require such significant power to maintain itself. Ethereum’s shift from proof of work to proof of stake in September 2022 goes a long way to changing this dynamic, reducing power requirements down by a factor of thousands.
Competing with digital fiat
Despite the vast improvements in Ethereum’s energy consumption, it still performs approximately 3 times worse than Mastercard transactions.
Without further technological shifts, crypto still cannot compete with digital fiat from an energy efficiency perspective. With results like this, ESG focused Institutional asset managers and retail investors are likely to pause when considering portfolios that include crypto asset investing.