The Impact of Digital Currencies on Energy Usage

This content discusses the impact of design choices on the energy consumption of digital currencies, whether in the form of crypto assets or central bank digital currencies (CBDCs). The paper outlines the main components and technological options that influence the energy profile of digital currencies, drawing upon academic and industry estimates. A comparison is made between different digital currencies and existing payment systems to determine their energy efficiency. The findings suggest that the ability to control participation and the consensus algorithm are key factors affecting energy consumption in distributed ledger technologies. While crypto assets such as Bitcoin are considered resource-intensive, alternative designs could potentially be more energy efficient than current payment systems.

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