How Ethereum’s ‘merge’ Makes The Cryptocurrency Greener
From Silicon Valley’s elite investors to emerging digital artists and innovative gaming developers, blockchain and cryptocurrency forced everyone to jump on the virtual train with incredible possibilities. However, cryptocurrencies’ shocking environmental impact is a prominent concern that certainly can’t go unnoticed.
2022’s climate crisis demands for a change and that includes the improvement of the energy profile of crypto. However, the industry has taken a few noteworthy steps towards becoming more climate-friendly. Ethereum, in particular, the second largest cryptocurrency has recently had a software upgrade to drastically reduce its carbon emissions. “the merge” is the most recent change in the security system.
The Environmental Benefits Of Ethereum's ‘merge
Until very recently, Ethereum was using a specific system known as “proof of work” to ensure the validity of transactions on its blockchain. Proof of work is used widely in cryptocurrency mining, for validating transactions and mining new tokens. To put it simply, proof-of-work blockchains are secured and verified by virtual miners around the world who participate in a virtual “race” to be the first to solve a math puzzle.
However, the crypto sphere has also doubled into another system called “proof of stake” which basically allows users of crypto to stake their crypto on the blockchain so that they can create their own validator nodes.
Those two networks merged on n September 15, 2022 –and now everyone on it is relying on proof of stake. This means that The electricity footprint of Ethereum should have a massive decrease from 8.5GW to less than 85MW – almost 99%. To put this into perspective, 8.5GW is almost the same amount of energy a U.S. household uses in over 47 days, according to the Digiconomist.
Ethereum's Lower Electricity Footprint
This massive decrease is no surprise given that, until recently, Ethereum “miners” were determined to burn as much electricity and computing power as possible to win a cash prize and validate their transactions. The merge, however, awards the right to validate transactions to the users with the most Ethereum “staked”. Instead of using electricity to fuel computing power, users can now put their personal cryptos on the line in a process called staking. Validators –aka users– are selected at random to verify new information to be added to a block on the blockchain. If they manage to confirm accurate information, then, they receive crypto as a reward.
Was Ethereum’s Merge Successful?
So what does this mean for crypto investors? Although it is too early to say for sure, Ethereum's successful merge didn’t bring in many new users. However, it could help make the crypto industry a lot more mainstream because of proof-of-stake's more energy-efficient process. Also, if, theoretically, the new low-energy consumption of ETH drives more people to use this cryptocurrency within the next few months, it could eventually switch places in the crypto hierarchy and become the first largest coin.
One thing is certain, with cryptocurrencies like Bitcoin consuming more electricity in a year than Sweden, Norway, or the United Arab Emirates, this positive change toward reducing crypto’s carbon footprint is certainly a great first step for the industry.