Ethereum is the second largest cryptocurrency in the world
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Ethereum, the world’s second-largest cryptocurrency, has managed to reduce emissions by 99.99% after an unprecedented experiment in ditching power-hungry mining and adopting a new approach, according to researchers. bottom. But experts say there is little desire for such a change among users of Bitcoin, the largest digital currency, as there is no central authority to lead its development.
Like Bitcoin and many other cryptocurrencies, Ethereum relied on “proof of work” to secure the network. In other words, computers were performing a huge number of calculations to “mine” new currencies and validate transactions. This process uses a huge amount of power. However, in September 2022, Ethereum switched to a new methodology called “Proof of Stake” during a period of change called a merge.
The Cambridge Center for Alternative Finance (CCAF) has published comprehensive data on Bitcoin’s energy use over the past four years, and has published similar data for Ethereum. Alexander Neumuller A Cambridge University professor who worked on the project said the experimental update was a technical success, achieving a “tremendous” reduction in power consumption.
In the new system, instead of using computer hardware to mine new currencies for rewards, validators deposit money into the network to validate transactions and earn the right to receive rewards. Before the merger took place, the Ethereum Foundation, the non-profit body overseeing Ethereum’s development, estimated that it would reduce energy usage by 99%, but none had the same scale, so they decided to switch. results were unpredictable. has been tried before.
Ethereum, like Bitcoin, has used more energy every year since its launch in 2015. By 2021, we were using 16.4 terawatt hours, according to CCAF data. By September 14, 2022, the day before the merger, he had already used 17.6TWh. He was due to head into the end of the year at 21.4TWh.
CCAF currently estimates that Ethereum consumes just 6.6 gigawatt hours of electricity annually, equivalent to about 2,000 typical UK homes. In contrast, previous consumption from Ethereum launch to Merge totaled 58.3 TWh, comparable to Switzerland’s annual electricity consumption.
Neumüller said that due to the scale of the challenge, success was not guaranteed. “A common anecdote in that regard was a jet changing his engine mid-flight,” he says. “It was executed very well. No one knew exactly what was going to happen.”
Some analyzes suggest that while Ethereum’s power consumption has fallen, the hardware that used to consume it is now being used for other purposes. Kyle MacDonald, who conducted his own research into the energy use of the Ethereum network prior to the merger, found that a large number of miners frustrated by being left with very expensive, specialized hardware and no source of income were forced into other It said it has decided to continue harvesting coins.
However, Neumüller says there is evidence that not all miners have switched and many have sold their hardware. In his research, he looked at other cryptocurrencies that miners were able to switch to profitably, and found that between September 8, 2022 and March 4, 2023, miners gave up and replaced hardware. We calculated that almost 80% of the computing power used for mining simply disappeared because we sold it. .
Despite the success of Ethereum’s switch, Neumuller says the Bitcoin network is too tied to the current proof-of-work approach to keep up.
Ethan Vera, co-founder of cryptocurrency firm Luxor Mining, also believes a similar change is unlikely with Bitcoin. “Proof of work is the foundation of Bitcoin. The use of energy is critical to its security he mechanism,” he says.
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