Understanding the Impacts of Blockchain Technology

The conversation around blockchain sustainability continues to be an important one for the industry. However, it’s clear that further analysis and research are needed to move this conversation toward actionable steps and decisions. To date, most studies on the environmental impacts of blockchain focus on a single blockchain protocol and define bespoke methodologies and assumptions, making meaningful comparisons of results across studies challenging.

This is why Stellar Development Foundation (SDF) set out to undertake further research. Our goal was to help create standard tools to measure and understand the energy usage of the different consensus mechanisms, the underlying algorithm that powers a given blockchain. This led us to work with an international consultancy to develop a first-of-its-kind assessment framework with a methodology to quantify the environmental impacts of a blockchain protocol.

Today, we released the full report, Embracing sustainable blockchain innovation: Understanding the impacts of blockchain technology, outlining the methodology of the assessment framework and explaining the quantitative considerations. This report and supplemental materials are now available at stellar.org/sustainability.

To create a broader understanding of the impacts of different approaches to blockchain, we are making this report available to other blockchains to assess their footprint.

And as part of our journey to better understand the Stellar network’s impact, we applied the framework to the Proof-of-Agreement (PoA) consensus mechanism. After evaluating its electricity consumption and CO2 emissions, we have the data to show that Stellar is efficient by design. Furthermore, the findings show that Stellar’s footprint is equivalent to the greenhouse gas emissions from 33.7 US homes’ electricity use for one year.

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We hope this is a step towards more transparency across financial services, including in blockchain, so we are all building towards an inclusive, equitable, and sustainable future of finance.

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