What is the environmental impact of Web3?

Estimating the environmental impact of such a broad ecosystem as a digital communications network is just a guess, even for industry experts. How many data centers are there that can be identified? How many stealth centers are operating (mainly in the military and government sectors)? How many are working above or below their capacity? How much power do they take “from the wall”?

The questions go on and on, but if you’re trying to measure the power consumption and carbon footprint of the internet, you also need to consider all the transactions that take place on it. web3like the conventional web, has layers, so the only way to analyze its durability is by segment. The application layer will be the most challenging in terms of how it will affect the environment – ​​and ultimately climate change.

A useful evaluation of Web3 should include this: If Web3 represents an evolution from Web2 to betterment of humanity, it should also be more sustainable. This means less power for more online services that will come with the advent of Web3; at the moment here in mid-2022 this does not seem a feasible task.

Web3 defined

Over the last 40 years or so, the Internet has been divided into three stages of development: Web1, Web2 and Web3† Web1 came into use with the public in the early to mid-1990s, before smartphones. Websites were mostly static, with just text and a few images. Web2 came into play with interactive websites in the 2000s; wearable devices (smartphones, tablets, smartwatches) allowed users not only to consume content, but also to create it. The cloud, which came about in late 2006 with the introduction of AWS S3 storage, changed everything, as it enabled the full integration of society life on computers – from finances to personal life.

The 2020s are a starting point for a new internet, Web3, which represents the decentralization of everything. Decentralization means there is no central agent responsible for important decisions; the opposite of this would be a service like Google, which uniquely manages many types of transactions on Web2.

On Web3, we can expect a lot more 3D video, augmented reality applications, faster moving and more impactful video games, AI/ML powered applications for business and entertainment, and a number of other things that we don’t normally see on the current Web2.

Decentralized Finance, or DeFi, becomes another central resident of Web3. The first major cryptocurrency, Bitcoin, was also the first Web3 project to be successful in this sector. Bitcoin is decentralized through a distributed architecture (called a blockchain) in which each segment has many agents communicating with each other in search of consensus. Yes, it is quite labor and time intensive, which goes against the idea of ​​automation, which has so many applications these days.

Why cryptocurrency takes so much power

Here is an example of how cryptocurrency works in democratized online transactions:

• Joe and Diane want to make a sale transaction on the bitcoin network. To do this, it must be verified, validated and registered. The people responsible for validating the transactions are the “miners” who compete among themselves to be selected for this service. When a miner does his job, the miner receives a reward in bitcoins.
• When a miner has created a new block in the network containing valid transactions, other miners will check whether everything is indeed correct. If there are any inconsistencies in the information, that transaction block is rejected and another miner is selected to redo the task.

Sounds more complicated than most people want to deal with? Probably, which is why it may take a long time for these types of transactions to become commonplace. Still, the idea of ​​a universal currency with no ties to governments or other institutions (such as banks and hedge funds) is appealing to a growing number of people worldwide.

Right now, the computational overhead of completing these transactions is alarming, but by mid-2022, relatively few people are using the system. However, with several million people potentially using Bitcoin, Ethereum or some other form of cryptocurrency in the future, the power of the wall to handle these powerful interactions will become a serious problem for Web3’s sustainability goals.

The amount of energy required to mine a single bitcoin is estimated at 86,000 to 286,000 kWh. A kWh is the amount of energy that a 1000 watt appliance consumes in more than an hour. To put that into perspective, that’s about 59 days of power consumed by an average American household. On a average day, 240,000 to 300,000 bitcoin transactions are sent over the network. When these numbers reach the seven- and eight-digit realms, red lights will flash in data centers around the world, data center temperatures will rise, and environmental lists will be outrageous.

Bitcoin’s network consumes about 128 GWh per day to produce 900 bitcoins. This is not a good starting point for trying to control the power and carbon footprint used on the internet – the current or the upcoming version.

Crypto is good but it is hungry

Tesla CEO Elon Musk recently tweeted his concern that “cryptocurrency is a good idea on many levels…but it shouldn’t come at the expense of the environment.” Shortly after he wrote that, Bitcoin’s business value fell 15%. Growing global pressure on bitcoin miners to use more renewable energy has led to the emergence of initiatives such as the Bitcoin Mining Council and forced thoughtful investors to look for “greener” cryptocurrencies.

However, it is currently unknown whether there are such cryptocurrencies to invest in; they all consume a lot of electrical power to provide the calculations needed to provide a secure and successful system for billions of daily transactions.

The energy demand around Bitcoin has long been a concern, especially as we have seen network activity quadruple since its last peak in 2017. The network is still maturing; at the current level consumes Bitcoin 81.51 terawatt hours (TWh) per year† If it were a country, it would rank 39 in annual electricity consumption, ahead of Austria and Venezuela. As this trend continues upwards, it is clearly unsustainable progress in terms of environmental friendliness.

So far, we’ve only talked about the DeFi that will be used on Web3. We haven’t covered all the 3D video, AI/ML, augmented reality apps and tools, and dozens of other heavy, power-hungry applications commonly put to work with Web3 as a facilitator.

Looking for alternative power sources

Does the potential Web3 network with conventional power sources seem tenable for decades to come? No chance.

Are there alternative ways to deliver the extra power needed for the richer, deeper services (3D video, AR, more AI/ML-powered services, etc.) Web3 will bring to its users? There are indeed. In a concerted effort to shake off the fossil fuels that humanity has used for centuries, other energy sources are being developed, such as hydropower, wind, solar energy, biofuels and geothermal energy. The future may reveal other fuel sources to come.

Processor makers continue to design and make cooler operating chips for all of our electronic devices. But we’re still a long way from having a majority of these new chips in our devices.

In 2018, Microsoft sank an experimental data center off the coast of Orkney, England, in an experiment called Project Natick to determine whether placing these units underwater would result in making these units more reliable and energy efficient. In September 2020, the company lifted it off the ocean floor and called the experiment a success†

Could thousands of underwater data centers be the future of data storage? Possibly, but they alone will not be the answer to all the new power requirements that Web3 will present to its users.

When can you expect a sustainable web3

While we’ve touched on a few facts here regarding the sustainability of a network that only partially exists today, there’s no way we can say for sure what’s going to happen here in the future – even through the end of this decade. It’s way too early and too much is happening fast in the IT world. Major innovations, especially energy savings and carbon footprint, need to be created and operationalized before a sustainable Web3 can be scaled up and deployed regularly for billions of users.