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Ethereum crypto moves to cut its CO2 output by 99%

Ethereum, the second largest cryptocurrency, has finally moved to a ‘proof of stake’ system. This means the carbon emissions associated with mining its coins could be cut by 99%.

While environmentalists are staunchly anti-crypto at the moment, Ethereum has shown that the industry can shed its problematic link to fossil fuels.

The second largest cryptocurrency globally has just completed a software upgrade it’s calling ‘the merge.’ This will drastically alter the processes that generate Ethereum tokens on blockchain, and the biggest beneficiary will be the planet.

Up until this week, Ethereum had been employing what’s known as a ‘proof of work’ system. This uses stacks of supercomputers to certify trades along one continuous ledger without a third party being involved. It’s incredibly efficient, but ecologically abhorrent.

The autonomous data crunching requires so much energy to run, that dying coal plants have been revived purely to keep these decentralised empires running as normal. In the context of a single year, Ethereum would previously burn through as much power as the entire country of Libya.

Following ‘the merge,’ however, the company has now shifted to run exclusively on a ‘proof of stake’ process. Instead of using autonomous algorithms to create blocks on its ledger, this instead uses physical validators as a third party to create equity stakes, much like a deposit.

If you’re still confused as to what this all means, the crux of ‘proof of stake’ is that it uses immeasurably less electricity. For clarity, Ethereum’s wholesale switch could now reduce the carbon emissions linked to its trading by more than 99%.

The Digiconomist – an energy consumption index for cryptocurrency – has revealed that the move could lead to 0.2% of the planet’s entire electricity consumption vanishing overnight, though Bitcoin still remains the worst offender within the industry.

‘All eyes will be on Bitcoin. It remains the largest polluter in the crypto space. Even today Bitcoin is responsible for as much electricity consumption as Sweden. And we know that’s not going to change,’ said Digiconomist chief Alex de Vries.

Since the wholesale change was finalised yesterday (September 15), Ethereum’s market price has jumped by 2% and boasts an overall value of just under $200bn. Bitcoin, having plummeted from its peak of $1tn in 2021, now has a cap of $387bn.

Carol Alexander, a finance professor at the University of Sussex Business School, believes this development could spark a significant power shift within crypto.

‘The merge is the most important event in blockchain history,’ she said. ‘In my opinion, today marks the beginning of the end of Bitcoin’s dominance over crypto assets.’

If this future Carol speaks of is one that involves conscious consideration for the planet, we’re certainly down for it. The web3 is a world that is constantly evolving, and we need lynchpins to ensure it is constructed in the right way.

 

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