Ethereum Just Cut Energy Consumption by 99.988%
A CCRI report published yesterday estimates The Merge reduces the electricity consumption and carbon footprint of the Ethereum Blockchain network by over 99.988 % and 99.992 %, respectively. If you didn’t know, this is Big news and one of the most significant upgrades in blockchain history.
“The merge will reduce worldwide electricity consumption by 0.2%”
-was tweeted yesterday morning by Vital Buterin, co-founder of Ethereum
- Ethereum is a decentralised blockchain platform that runs and validates smart contract code. (Bitcoin uses the same type of technology)
- Ethereum is the world’s second most valuable cryptocurrency
- Ethereum and Bitcoin validate transactions using a mechanism called “proof-of-work,” under which high-powered computers were required to solve complex puzzles. This requires massive energy consumption. See Fig.1
- Digiconomist, who track crypto energy usage, claim that a single Ethereum transaction can consume as much energy as the weekly power consumption of an average US household
- Ethereum and Bitcoin were consuming as much electricity as Sweden
- Blockchain technology supports a growing number of applications and processes including dApps, Smart Contracts, Cryptocurrency, IoT, Money Transfer, NFTs,
- Benefits of Blockchain include Enhanced Security, Greater Transparency, Instand traceability, Increased Efficiency and Speed, and Automation with Smart Contracts which are of huge benefit to many sectors of industry such as Supply chain, Food Chain, Banking, Healthcare Government, Insurance to name a few.
- Blockchain platforms are under frequent fire from environmentalists
Fig1. Energy Consumption by country vs Bitcoin & Ethereum
Blockchain requires computers to solve complicated math problems in order to verify transactions. This proof of work consensus mechanism consumes far more energy than many people assume as it involves many different competitors racing to see how quickly they can package the transactions and solve the mathematical problem. The miner who completes the mathematical equation fastest not only certifies the transaction but also gets a small reward for their trouble in the form of tokens. However, it is inherent in blockchain technology for math puzzles to get much, much harder as more people compete to answer them. Multiple miners compete for rewards resulting in massive electricity usage. Even though hundreds of thousands of computers are racing to answer the identical problem, only one solution from one miner will be accepted and only they will be rewarded.
How did Ethereum solve the energy issue?
Fig2. Ethereum Energy Consumption over time
The Merge shifts Ethereum to a process known as “proof-of-stake,” which is substantially more energy efficient because it eliminates the need for computers to compete against each other. Instead, users deposit ether in order to compete for additional currency. Read more about The Merge
Deutsche Bank research analyst Marion Laboure wrote this: “will improve security, reduce energy consumption, increase the number of users on the network, and grow its market cap,” this week.
Social media and news channels are awash with stories of how The Merge will affect the future of cryptocurrency and how it will affect prices and information for investors.
What I think is more salient is the implications for Blockchain technology as a whole. It is inevitable that Web3 and Blockchain technology will be running widely used major infrastructure and platforms in the future. Now one of the largest obstacles has been potentially removed.
We look forward to a secure future!