Cryptocurrencies are often criticized for being bad for the planet. Each year, bitcoin mining consumes more energy than Belgium, according to the University of Cambridge’s Bitcoin Electricity Consumption Index. Ethereum’s consumption is usually pegged at about a third that of Bitcoin, even if estimates vary. While about 39 percent of the energy going into bitcoin mining comes from renewable sources, the industry’s carbon footprint is generally considered unacceptable, according to a 2020 Cambridge report. According to a 2019 study, bitcoin mining churns out between 22 and 22.9 million tons of CO. from2 every year.
The problem is that specialized computers, powered by dazzling amounts of electricity, are required to process and verify transactions of cryptocurrencies such as bitcoin or Ethereum’s ether on blockchains, through a process called proof-of-work mining. In this system, thousands of computers around the world (but especially in the US, China, Kazakhstan and Russia) compete with each other to solve a math puzzle and earn the privilege of adding a series of transactions, or to block’. to the ledger. The miner who has the upper hand wins a crypto reward.
Most Bitcoin proponents will tell you that proof-of-work mining is essential to keeping the network secure, and would never think of tampering with something first conceived by the currency’s pseudonymous creator, Satoshi. Nakamoto. But Ethereum is on the cusp of a monumental change that will significantly reduce its environmental impact.
Launched in 2015 by a 21-year-old whiz kid named Vitalik Buterin, Ethereum is on the cusp of swapping proof-of-work mining for an alternative system known as proof of stake, which doesn’t require energy-guzzling computers. The Ethereum Foundation, a nonprofit research organization leading the way in updates and improvements to the Ethereum blockchain, says the shift will reduce the network’s power consumption by 99.5 percent. The big switcheroo is known as the Merge – and will take place on September 14th.
What is the merger?
The Merge hinges on the merger of Ethereum’s current proof-of-work blockchain with the Beacon Chain, a proof-of-stake blockchain that launched in December 2020 but has so far not processed any transactions.
A number of upgrades, scheduled for launch in the coming weeks, will lay the groundwork for a transition from one chain to another. Justin Drake, a researcher at the Ethereum Foundation, says the way the process is structured is like a car switching from an internal combustion engine to an electric one. “How do we do that? Step one: We install an electric motor parallel to the petrol motor. And then – step two – we connect the wheels to the electric motor and turn off the petrol motor. That’s exactly what’s going to happen at the Merge “We’ve had this parallel motor from the Beacon Chain for a year and a half – and now the old ‘gasoline’ proof-of-work motor is shutting down.”
After years of delays, the Ethereum community is confident that the long-awaited shift will finally happen, following a successful test run conducted on August 10 on a test blockchain called the Goerli Chain. The fact that Buterin has a book called Proof of stake coming out in September is probably a coincidence.
How does Ethereum proof of stake work?
Talking about proof of stake is a bit like talking about French cheese: there are countless varieties – with hundreds of cryptocurrencies claiming to use some version of the process. However, in its most basic form, proof of stake is based on the idea of securing a network through incentives rather than hardware.
In this scenario, you don’t need an expensive mining computer to join the network: you can use your laptop to place a “bet”: a certain amount of cryptocurrency locked onto the network. That gives you the chance to be selected, usually through a random process, to validate a particular block and earn crypto rewards and fees. If you try to play the system, for example by clearing a block, the network will punish you and destroy or “slash” some or all of your bet.
