The Ethereum blockchain, the world’s second largest cryptocurrency, has successfully transitioned to proof-of-stake. Thanks to this transition called “The Merge”, the currency will consume significantly less energy.
What the transition will entail is the laying off of extractors (‘miners’). Ethereum is in effect moving away from proof-of-work, where miners use large amounts of computers that perform complex calculations to seal transactions on the blockchain, in favor of proof of participation (‘proof-of-stake’), using guarantees and wasting up to a thousand times less energy.
The operation was called “The Merge”, since it consisted of merging many lines of code to change the mode of validation of operations on the “block chain”, a huge computer register supposed to be tamper-proof.
We are moving from the Proof of Work (POW) protocol to that of the Proof of Stake (POS). In both cases, a pool of computers (the nodes, approximately 10,000 in number) is used to validate each series (or block) of transactions. The POW consisted for each node to perform countless calculations to hope to earn a few units of cryptocurrency. Hence the very high energy consumption.
The new POS protocol is more virtuous: each node must present cryptocurrency units, which therefore does not need an operation to have the right to validate a block. As a result, the number of calculations carried out by computers is reduced, further reducing their electricity consumption. This should considerably lighten the so far disastrous environmental footprint of ethereum.
The energy savings should be well over 99%. To get an idea, Ethereum has consumed about 80 TWh over the last twelve months, the equivalent of the annual consumption of Chile.
A report by research company Crypto Carbon Ratings Institute (CCRI) estimates that moving forward, Ethereum is expected to usemerely 2,600 megawatt-hours per year, comparing this reduction to the Eiffel Tower shrinking to the size of a Lego toy person.
Ether, the cryptocurrency directly linked to ethereum, represents only around 20% of the total value of existing virtual currencies, in second place behind bitcoin (40%). The latter remains on the POW protocol, and its environmental record is disastrous: it runs largely on electricity produced from coal-fired power plants.
The Ethereum initiative has been applauded by several environmental players who believe that the operation must become a kind of standard for other cryptocurrencies on the market. In this sense, questions are emerging, especially about the largest cryptocurrency in the ranking, namely: Bitcoin. Some legitimately wonder about Bitcoin’s ability to make the same transition.
For some time, Bitcoin has faced many criticisms pointing to the energy-consuming and polluting aspect of its network. Indeed, the Bitcoin blockchain consumes an abundant amount of electricity through its proof-of-work validation system – harnessing the computing power of graphics cards. Although it uses more and more renewable energy, Bitcoin nevertheless raises concerns about its carbon footprint, due to the growing increase in its mining difficulty.
In a context of energy restrictions and the greening of several sectors, Bitcoin is the target of several institutions. For example, the White House recently published a report in which a group of experts examines the prohibition of Bitcoin mining in the United States.
Associations are also pushing Bitcoin to become greener. Such is the case with the Environmental Working Group (EWG), an environmental advocacy group that has partnered with Greenpeace to get Bitcoin to make a similar transition to Ethereum. To support this initiative, the association launched an advertising campaign with a budget of one million dollars.
The ‘Change the Code, Not the Climate’ campaign will now step up its efforts with $1 million in new online ads, and Greenpeace has launched a petition calling on Fidelity Investments to push bitcoin and follow Ethereum’s lead. by switching to a power-saving protocol that drastically reduces the contribution of cryptocurrency to the climate crisis. explains the EWG association on its website.
Although on paper nothing prevents Bitcoin from moving to proof-of-stake, in reality, the maneuver seems more difficult than for Ethereum.
Bitcoin having no active founder, like Vitalik Buterin for Ethereum, it is not dependent on any single entity. In this logic, users place the code made by the creator Satoshi at the center of the Bitcoin system.
If a developer wants to make a change in the protocol, Bitcoin must obtain the consent of a majority of its users: the miners and the network nodes. For this reason, it is very difficult to achieve significant changes in Bitcoin. This argument speaks in favor of the current system, which Bitcoin maximalists deem to be highly secure.
Ethereum has a much wider scope of applications than its competitor, as it serves as a medium for multiple uses, such as NFT exchanges. But these seem to have been just a bubble that didn’t last very long: it took off a little over a year ago, and has now almost completely deflated.
Neither ethereum nor bitcoin have really reached the status of currency, however: all attempts to use them for everyday transactions have failed, due to the significant costs and delays required for each operation.
These protocols do not allow more than five transactions per second, compared to 20,000 for the Visa network. These cryptocurrencies have mainly been used as speculative assets – which are losing momentum at the moment: their valuations have fallen by 50% over the past year.