## Digital Currencies and Energy Consumption

_FinTech Notes, June 7, 2022_

## Source details

**Canonical URL:** [Digital Currencies and Energy Consumption](https://www.imf.org/en/publications/fintech-notes/issues/2022/06/07/digital-currencies-and-energy-consumption-517866)

## Other formats

- [Markdown version](/en/publications/fintech-notes/issues/2022/06/07/digital-currencies-and-energy-consumption-517866/index.md)
- [Structured JSON version](/en/publications/fintech-notes/issues/2022/06/07/digital-currencies-and-energy-consumption-517866/index.json)
- [Bundle manifest](/en/publications/fintech-notes/issues/2022/06/07/digital-currencies-and-energy-consumption-517866/bundle-manifest.json)

## Bibliographic details
- Authors: Itai Agur, Jose Deodoro, Xavier Lavayssière, Soledad Martinez Peria, Damiano Sandri, Hervé Tourpe, Germán Villegas-Bauer
- Published: June 7, 2022
- Series: FinTech Notes
- DOI: https://doi.org/10.5089/9798400208249.063

---

### Key findings
- Design choices can make an important difference to the energy consumption of digital currencies.
- For distributed ledger technologies, the key factors affecting energy consumption are the ability to control participation and the consensus algorithm.
- Crypto assets like Bitcoin are characterized as wasteful in terms of resources.
- Other digital-currency designs could be more energy efficient than existing payment systems.

### Comparative energy profile and evidence base
- The paper establishes the main components and technological options that determine the energy profile of digital currencies.
- It draws on academic and industry estimates to compare digital currencies to each other and to existing payment systems.

### Implications for CBDC design
- The analysis derives implications for the design of environmentally friendly CBDCs.
- Policy-relevant levers highlighted:
  - Control of participation in the ledger (permissioned vs permissionless architectures).
  - Choice of consensus algorithm (energy-intensive proof-of-work versus more efficient alternatives).

### Scope and framing
- Covers both crypto assets and central bank digital currencies (CBDCs).
- Emphasizes technological design choices as central determinants of energy consumption outcomes.

---

## Content in this bundle

- **Digital Currencies and Energy Consumption; June 7, 2022**
  - [Digital Currencies and Energy Consumption; June 7, 2022 (Markdown version)](/-/media/files/publications/ftn063/2022/english/ftnea2022006.pdf.md){rel="alternate" type="text/markdown"}
  - [Digital Currencies and Energy Consumption; June 7, 2022 (PDF)](/-/media/files/publications/ftn063/2022/english/ftnea2022006.pdf){rel="external" type="application/pdf"}

---

_Source: https://www.imf.org/en/publications/fintech-notes/issues/2022/06/07/digital-currencies-and-energy-consumption-517866_