The Ethereum merge is reducing high amounts of energy: here’s how
Ethereum is the second leading cryptocurrency on the market right now, and its popularity has risen since it provides more than a way to make fast transactions. Although Bitcoin paved the way for cryptocurrencies, Ethereum has everything an investor would want from such an environment, from transactional benefits to a world of NFTs, Dapps, DAOs and much more.
As a blockchain, Ethereum allows users to start coding and change the platform to their linking, which is why they provide free documentation and tutorials to understand it better. One of the most significant changes that developers made is the one we’ll get to discuss in the following paragraphs. It may put Ethereum among the top most sustainable cryptocurrencies, but it will also benefit users. Let’s get into it.
What is the Merge?
Since its release, Ethereum has used a proof-of-work mechanism, which requires users to solve complex mathematical puzzles to successfully mine. Although it’s a standard method among all cryptocurrencies, it’s not efficient anymore because it gets more difficult to mine for beginner investors, causing a lot of energy to be needed to gain something that is not sustainable anymore. Mining already produces a lot of heat, but since you need professional computational power to mine, the energy people use in the process can light up an entire town for a year.
So, as investors and developers become aware of this issue, they decide it’s a good time for a change and switch Ethereum to proof-of-stake. POS eliminated the energy-intensive mining and enabled the network to be secured using staked ETH. Also called the Merge, this event took place on the 15th of September 2022, and although it’s too early to assess the impact of this change, it has already reduced Ethereum’s energy consumption by ~99.95%. Compared with POW, POS has the following benefits:
- It makes it easier for individuals to mine and participate in securing the network;
- It makes the blockchain more decentralized through efficient staking;
- It offers more crypto-economic security;
The Merge now allows more users to participate in the network, which can make the blockchain a greater place since Ethereum has an unlimited supply, and the more people demand it, the more its value will increase. Can we expect Ethereum to exceed Bitcoin in terms of popularity and usage?
Besides less energy consumption, the Merge has prepared Ethereum for becoming a more scalable blockchain. But many other things have changed in the way this cryptocurrency works. First of all, you don’t need 32 ETH anymore to run a node since it’s free for everyone to sync their own self-verified copy of Ethereum. Although, there are some things that the Merge didn’t change. For example, transactions weren’t accelerated, but some slight changes have been noticed. Finally, this switch did not change anything for holders and users, so they don’t need to upgrade or update their wallets or technology.
The Merge also hasn’t changed the ETH coin price, although it’s safe to say that any news related to this blockchain can influence its price and popularity. Like any other cryptocurrency, the price is affected by the demand and supply, media coverage and investor sentiment, so you may expect some changes in its volatility after a while since it’s been little time since the Merge was established.
How is the Merge related to other upgrades?
Ethereum is working continuously to update its quality, so other upgrades are going on that will affect Ethereum and might be influenced by the Merge. First of all, the Beacon Chain was adopted as the new consensus layer to the original Mainnet execution layer. Since then, it’s been a foundational component of Ethereum’s security, sustainability and scalability. But since the Merge, blocks are proposed by validating nodes that have staked ETH for the right to participate in consensus.
Next, we have the Shanghai update, which is planned to follow the Merge soon. Its main objective is to offer stakes the ability to withdraw but also to cover what the previous update lacked. When this happens, the whole transition will be simplified and maximized to its full potential. The update is expected to take place in early 2023.
Finally, the Merge will also change the sharding process, another upgrade we expect in 2023. It
will enable layer two solutions for lower transaction fees and provide the requirements for secure data storage distribution. This update couldn’t have been possible without the Merge since layer two is a separate blockchain that extends Ethereum.
Cryptocurrencies and sustainability: how do they affect the environment?
Blockchains need to be verified for the process of validating transactions to get users incentives, but this mechanism is costly. When people mine, they’re actually running programs on their computers that are trying to solve puzzles. But they can’t mine on any computer if they want to earn coins. Investors need great computational power in order to have more earning chances, for which they need to use specific hardware (ASIC), which generates an enormous amount of power.
It is estimated that the energy used to mine Bitcoin surpasses the annual energy usage of Norway, and the amount of carbon dioxide reached 40 billion pounds in 2020 in the US. All this waste happens because cryptocurrencies use the old POW mechanism, which is no longer efficient since mining got more complicated.
But not all blockchains have such an impact on the environment. Now, green cryptocurrencies are trending in the world of investors since their purpose is to use renewable energy and have other mechanisms that don’t affect the environment that much. Some of these are Chia (XCX), Cardano (ADA), Nano (NANO), and Stellar Lumens (XLM).
The newest update of Ethereum is the start of a new era among cryptocurrencies. It allows users to mine easier, and its impact on the environment has decreased substantially, which has placed Ethereum among the sustainable cryptocurrencies. We’re excited for the following report on how the Merge changed mining and if users can benefit more from this upgrade in the future.
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