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As far as I know, most or all Android devices don't have any hardware cryptography accelerators, so the block-level storage encryption happens on the CPU.

How high is the impact of encrypting and decrypting on the CPU with regards to read/write performance and battery consumption?

This will probably depend on the CPU and the storage used (I can imagine that on newer devices, the bottleneck is not the AES algorithm on the CPU, but the NAND write rate); some benchmark numbers from different devices would be very useful.

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You are absolutely correct in stating that the bottleneck is actually not the encryption/decryption but NAND write rate. In fact, the performance observed for read/write of encrypted v/s non-encrypted does not vary significantly owing to high cpu speeds. What you might look at though is the rate at which block level encryption happens for the first time. Once the device is block encrypted, the performance numbers are pretty close.

You can use AndroBench to profile your device pre and post encryption.

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