Last summer, we talked about the environmental considerations of cryptocurrencies. A number of cryptocurrencies are geared around sustainability, including SolarCoin. However, some mainstream cryptocurrencies such as Ethereum are becoming eco-friendlier as well.
Ethereum is the second largest cryptocurrency after Bitcoin. The cryptocurrency recently moved from a proof of work concept to a proof of stake one which is part of a software upgrade known as the merge. This upgrade changes how transactions on the Ethereum network are managed.
Below, we explain what has changed and whether these changes make Ethereum a greener cryptocurrency. As we stated in the past, we talked about how making Ethereum more sustainable may help it gain traction. The Merge may play a huge role in this.
What is “The Merge”?
The merge is the name given to a change in the security system used by the Ethereum network. Until mid-September 2022, the Ethereum network uses a proof of work to validate transactions and to provide consensus within the community on who owns what Ethereum.
However, there was a sizable number of people in the community who were running a parallel proof of stake system. It is these two systems that were merged during this recent upgrade.
What Has Changed?
Proof of work worked by letting “miners” compete to burn as much electricity and utilise a lot of computational power to prove they have done some work. The winner would then be allowed to validate transactions that happened in the previous ten minutes plus a certain amount of Ethereum.
Proof of stake, on the other hand, gives the right to validate Ethereum transactions to people with a sizable Ethereum “stake”.
From how each of these systems works, you can see that the proof of work system required a lot of electricity to validate transactions. At its peak, Ethereum mining and related activities were utilising about 8.5 GW of power. This is expected to fall to 85 MW of power.
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