Home » White House’s Criticism on PoW & is PoA Better?

White House’s Criticism on PoW & is PoA Better?

by Osman Kuzucu

Last week The White House has released a report (which you can read by clicking here) urging the Environmental Protection Agency (EPA) and the Department of Energy (DOE) to take measurable actions to control energy consumption in proof-of-work cryptocurrency mining.

According to the article, the estimated global electricity usage for cryptocurrency mining as of August 2022 exceeded the annual electricity usage of countries including Argentina and Australia and roughly estimated to be 120-240 billion kilowatt-hours per year.

At the recent Ethereum Merge livestream on Youtube, Justin Drake, an Ethereum researcher, mentioned that Ethereum’s PoW was making 0.2% of the global power usage. Considering those facts, we can clearly see that the proof of work consensus mechanism is consuming a lot energy to secure the transactions on the network.

Why PoW then?

Proof-of-work as used in Hash Cash, Bitcoin and various other cryptocurrencies was mainly used for disabling forgery in publicly accessible distributed ledgers. The problem of having a trustless network, consisting of many nodes, and double spending being not possible for truly peer-to-peer transaction led to the invention of Blockchain. From the technical standpoint, proofs generated by the proof-of-work algorithms are mathematically secure, which mean that they can’t be altered or they can’t be spoofed. For that reason PoW was the choice of Satoshi Nakamoto. At the time Bitcoin was invented and its early years, mining was not consuming a lot of power and that’s why it was preferred for many alternative coins (altcoins) right away.

However, with the technological advancements and crypto prices going up, PoW mining became a profitable business. Even profitable enough for chip manufacturers to produce ASICs designed specifically for Bitcoin mining. That increased the overall security of the Bitcoin network as well as the hashrate, along with the power consumption.

What is Poa?

PoA stands for Proof of Authority. Which means whoever has the authority has the ultimate control of the blocks to be produced. Even though the PoA consensus allows only authorized nodes to generate blocks, it can’t forge transactions without asset owners’ private keys. For that reason, they carry out the immutability of the data as well as transparency brought by the blockchain technology.

PoA consumes less power than PoW mining. In fact, running a PoA network consumes almost zero extra energy for block generation.

Why PoA is not widely known?

PoA is often criticized for being too centralized approach. However, the second largest EVM network – Binance Smart Chain – also runs on PoA based consensus algorithm. And based on the network utilization as well as project count, it could be seen that BSC is more user friendly, predictable and robust than ETH or any other non-PoA blockchains.

By being the second largest EVM, Binance Smart Chain also shows us that if utilized in a correct way, PoA can help projects and users to easily interact with the blockchain.

omchain also runs on a PoA based IBFT2 consensus algorithm and it’s a green blockchain, which means it doesn’t consume any extra energy for block generation. If you would like to learn more about omchain, read our blog post about it.

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