Why is blockchain technology costly?

While blockchain can reduce transaction costs for clients, it is not an accessible technology. The PoW method used to validate transactions on the bitcoin network, for example, necessitates much computational power.

  • The electricity generated or used by the bitcoin network’s millions of computers is about equivalent to Norway and Ukraine’s annual electricity consumption.

  • Despite the high costs of mining bitcoin, consumers continue to utilize more electricity to validate blockchain transactions. That is because miners are compensated with enough bitcoin for their time and effort when adding a block to the bitcoin blockchain.

  • However, miners will be needed to be compensated or otherwise incentivized to validate transactions on blockchains that do not use cryptocurrencies or related networks.

  • Some answers or solutions to these problems are starting to emerge. Bitcoin mining farms, for example, have been set up to utilize solar electricity, excess natural gas from fracking sites, or wind farm power.