A project statement states that the transition to a new design for Ethereum’s underlying infrastructure, which will significantly lower carbon emissions, will take place within the next “months.” Ethereum is the second-largest cryptocurrency behind bitcoin. Because Ethereum also serves as the basis for a wide range of other cryptocurrency-related projects, including multiple non-fungible token systems, the modification might greatly boost the sector’s energy efficiency.
The major goal of the strategy is to alter how Ethereum’s underlying blockchain functions. Like Bitcoin and the majority of other cryptocurrencies, Ethereum now uses a “proof-of-work” algorithm. To ensure that no single user can control the system, members must spend electricity performing challenging but pointless arithmetic. This ensures the security of the system as a whole. Once the transfer is made, Ethereum will begin using a process known as “proof-of-stake.” By that method, the system allocates internal tasks based on the quantity of Ethereum that current users currently own rather than the amount of electricity spent, necessitating the “staking” of some of their currency each time a decision is made. For quite some time, the switch to proof of stake has been contemplated, but the execution has been hampered by a variety of organizational and technological obstacles. Carl Beekhuizen, a research and development employee at the Ethereum Foundation, which is in charge of managing cryptocurrency development, has stated that the update will be ready “in the coming months,” as of right now.
In contrast to the existing Ethereum network’s 5.13 gigawatts (about similar to Peru’s consumption), Beekhuizen claims that the network will only require 2.62 megawatts of electricity following the conversion. This is not on the scale of a country, a province, or even a city; it is on the scale of a small town (around 2,100 American homes). Beekhuizen further points out that the benefits increase in line with the cryptocurrency’s worth. In an equilibrium proof-of-work system, the network’s power consumption increases as the price rises.
The price of bitcoin has recently dropped and is now 40% below all-time highs as a result of major players like China and Elon Musk expressing their displeasure with the currency. Even if Bitcoin doesn’t follow Ethereum and abandon proof-of-work anytime soon, there may be another way to lower the energy consumption of the system.