PROOF OF WORK: ENERGY INEFFICIENCY AND PROFITABILITY

摘要

Decentralized and immutable characteristic of blockchain has a possibility to change how the data is stored. Cryptocurrency is one example of successful blockchain technology implementation. The first cryptocurrency, bitcoin, was launched in 2009 and shortly afterwards followed by other cryptocurrencies, which are called alternative currency (altcoin). The blockchain system depends on a consensus mechanism to run. Most of cryptocurrency adopt the Proof of Work (PoW) consensus mechanism, which requires to run a computer program to solve a computational puzzle to verify the transactions and add the record into the blockchain, which called mining. Bitcoin uses SHA258 algorithm for its PoW. As an incentive, miners are then given some money on the currency. However, mining requires a lot of energy, alternatively, altcoins adopt different algorithm to run the system. This study aims to compare the energy used by various algorithms, which mined by four widely available, general purposes Graphic Processing Unit (GPU), and determine the profitability for each currency, given the mining share acquired for 24 hours. This is important because even the blockchain is not intended primarily for cryptocurrency, PoW-based blockchain system depends heavily on the mining process. Should the miners decided it is no longer profitable, they will easily switch to mine another, and without miners, the blockchain system will stop. The experiment shows that from 32 sets of experiment, only 15 sets (46.88%) are profitable. The result shows that among eight algorithms, Equihash, Ethash, and Cryptonight7 coins are the best performers, while Blake2b, Blake256, and Lyra2REv2 coins are the worst performers. Most the coins tested consume below than 1 TWh of annual energy consumption, except SiaCoin and Ethereum, and Decred.