What is the environmental impact of Web3?

Assessing the environmental impact of such a broad ecosystem as a digital communication network is merely a guessing game, even for experts in the sector. How many data centers are there that can be identified? How many stealth centers are operating (particularly in the military and government sectors)? How many are operating above or below their capacities? How much power are they taking “from the wall”? 

The questions go on and on, but when trying to measure the power usage and carbon footprint of the internet, one also has to consider all the transactions that take place on it. Web3, like the conventional web, has layers, so the only way to analyze its sustainability is by segments. 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 must contain this: If Web3 represents an evolution of Web2 to the betterment of mankind, it must 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 appear to be a feasible proposition.

Web3 defined

During the last 40 or so years the internet has been classified into three stages of development: Web1, Web2 and Web3. Web1 came into public usage in the early-to-mid-1990s, prior to smartphones. Websites were mostly static, providing only text and a few images. Web2 came into play in the 2000s with interactive websites; portable devices (smartphones, tablets, smartwatches) allowed users not only to utilize content but also to create it. The cloud, which came into being in late 2006 with the introduction of S3 storage from AWS, changed everything, because it made available the complete integration of life in society on computers – from finance to personal life.

The 2020s are a jumping-off point to a new internet, Web3, which represents the decentralization of everything. Decentralization is not having a central agent responsible for major decisions; the opposite of this would be a service such as Google, which singularly manages many kinds of transactions on Web2. 

On Web3, we can expect to see and use 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 we don’t normally see on today’s Web2.

Decentralized finance, or DeFi, will be another central resident of Web3. The first major cryptocurrency, Bitcoin, was also the first Web3 project to succeed in this sector. Bitcoin is decentralized through a distributed architecture (called a blockchain) in which each segment has many agents interacting with each other in search of consensus. Yes, it’s pretty labor-and-time-intensive, which works against the idea of automation, which carries so many applications today.

Why cryptocurrency takes so much power

Here’s an example of the way cryptocurrency works in democratized online transactions: 

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

Sound more complicated than most people want to deal with? Probably, and that’s why this type of transaction may take a long time to become commonplace. Still, the idea of having a universal currency with no ties to governments or other institutions (such as banks and hedge funds) is attractive to a growing number of people globally.

At this time, the computational overhead of completing these transactions is alarming, but relatively few people are using the system in mid-2022. However, with multiple millions of people potentially using Bitcoin, Ethereum or another form of cryptocurrency in the future, the power from the wall for handling these high-powered interactions will become a serious problem for Web3’s sustainability goals.

The amount of energy it takes to mine a single bitcoin is estimated to be between 86,000 to 286,000 kWh. A kWh is the amount of energy a 1,000-watt appliance uses in over an hour. To put that into perspective, that is about 59 days’ worth of power consumed by an average U.S. household. On an average day, 240,000 to 300,000 bitcoin transactions are sent over the network. When these numbers reach into the seven and eight-figure realms, red lights will be blinking in data centers all over the world, temperatures inside data centers will rise and environmentallists will be furious.

Bitcoin’s network consumes around 128 GWh a day in order to produce 900 bitcoins. This is not a good starting point for trying to control the power and carbon footprint used in the internet – the current version or the one to come.

Crypto is good, but it’s power-hungry

Tesla CEO Elon Musk recently tweeted his concerns that “cryptocurrency is a good idea on many levels … but this cannot come at great cost to the environment.” Shortly after he wrote that, Bitcoin’s business value tumbled 15%. The growing global pressure on bitcoin miners to use more renewable energy has led to the creation of initiatives such as the Bitcoin Mining Council and pushed thoughtful investors to seek out “greener” cryptocurrencies. 

However, it is not known at this time if there are such cryptocurrencies in which to invest; they all take loads of electrical power to provide the computations needed to provide a secure and successful system for billions of daily transactions.

Energy demands around Bitcoin have long been a concern, especially now that we have seen network activity quadruple since its last peak in 2017. The network is still maturing; at its present level, Bitcoin consumes 81.51 terawatt hours (TWh) annually. If it were a country, it would rank as number 39 for annual electricity consumption, ahead of Austria and Venezuela. As this trend continues upward, it is clearly an unsustainable progression in terms of being environmentally desirable.

Up to now, we’ve only touched on the DeFi that will be used on Web3. We haven’t discussed all the 3D video, AI/ML, augmented reality apps and tools, and dozens of other heavy power-hungry applications that will be commonly put to work using Web3 as the facilitator. 

Alternative power sources sought

Does the potential Web3 network using conventional power sources appear to be sustainable for decades to come? Not a chance. 

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

Processor makers are continuing to design and make cooler-operating chips for all our electronic devices. But we’re still a long way away for 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 them being more reliable and energy-efficient. In September 2020, the company retrieved it from 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 won’t be the answer to all new power requirements that Web3 will present to its users. 

When to expect a sustainable Web3

While we’ve touched on a few facts here regarding the sustainability of a network that only exists in part today, there is no way we can confidently point to what is going to happen here in the future – even to the end of this decade. It’s much too early, and too much happens quickly in the IT world. Major innovations – especially involving reduction of power and carbon footprints – need to be created and operationalized before a sustainable Web3 can be scaled up and deployed on a regular basis for billions of users.