Ethereum–the biggest presence in cryptocurrency behind Bitcoin— has announced it will be cleaning up its carbon footprint and going green. Ethereum is a decentralized, open source blockchain that uses the token Ether for transactions on its platform. The Ethereum blockchain also gives software developers the ability to create dApps–applications that can range from entertainment to business– and disseminate them to interested users.
Despite the celebrated innovations and widespread popularity of Ethereum, Bitcoin, and other cryptocurrencies, these technologies come with a devastating downside: mining these digital currencies deals a huge blow to the environment. The ecological impact of crypto even caused Tesla CEO Elon Musk to ban Bitcoin as a form of payment. He has since publicly considered lifting this ban if tokens were able to transition to clean energy.
In a study titled “The True Costs of Digital Currencies: Exploring Impact Beyond Energy Use,” researchers found that Bitcoin mining alone requires as much energy as all of the data centers on Earth combined. The preeminent cryptocurrency also has a carbon footprint that matches the city of London. The authors of the study concluded that Bitcoin is responsible for 90.2 million metric tons of carbon gases per year.
Ethereum is no less excessive in its energy use. According to estimates, the blockchain platform consumes as much electricity as the African country of Libya. This energy use was exacerbated by the rise of NFTs (Non-Fungible Tokens), one-of-a-kind digital artworks whose property rights are sold for ETH in exchange for a certification of ownership. NFTs are created and published on Ethereum’s own blockchain.
Ethereum hopes to change the face of crypto by going green with “The Merge”
But all that might be behind Ethereum as the second highest market capitalization in cryptocurrency prepares to turn a new corner it calls “The Merge.” The Merge is Ethereum’s plan to slash its energy consumption dramatically by 2022. The plan involves an upgrade that will reduce the Ethereum network’s energy use by over 99%– firmly establishing Ethereum as the most powerful green option in crypto.
The energy cut will mainly be the product of a new form of validating transactions on the blockchain called “proof of stake.” Proof of stake will do away with the energy-draining process of cryptocurrency mining and introduce staking in its place. New transactions on Ethereum’s blockchain will be approved by “validators” who put up a stake on behalf of the transaction:
“Ethereum’s new model will rely on a network of “validators,” people or groups that put up a stake of at least 32 Ether coins (equivalent to nearly $72,000 as of late July). An algorithm will semi-randomly select who gets to create new blocks in the chain; validators who stake more than the minimum 32 Ether increase their odds of winning—sort of like buying more raffle tickets” explains Adam Bluestein, reporting for Fortune.
This ecologically friendly reinvention could attract a whole new audience to Ethereum’s Blockchain platform, but it also poses the risk of alienating its longstanding users. The Merge will do away with the process of mining, a crucial part of the blockchain’s process that miners profited directly off of in the form of transaction fees. The loss of these transaction fees could cause upset miners to abandon Ethereum altogether.
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