EXPLAINED: Why Ethereum Is Giving Up Its “Miners” 

The cryptocurrency Ethereum has the potential to significantly reduce its energy consumption and ensuing climate-related pollution with a complex software change. However, the phase known as “the merger” is not sufficient to solve the problem. 

The energy-intensive “mining” process has been effectively eliminated in Ethereum, the second most valuable cryptocurrency after bitcoin. Thanks to the change implemented late on its blockchain, new coins. Massive energy consumption and, in many cases, higher greenhouse gas emissions at older power plants are caused by mining’s high computing power requirements.  

However, even though it is anticipated to significantly lessen the expected environmental impact of crypto, the Ethereum change won’t completely eliminate it. The proponents of bitcoin have not yet demonstrated much interest in eliminating mining. 

PULL UP FOR A SECOND – HOW DOES CRYPTOCURRENCY WORK? 

Digital currency known as cryptocurrency is protected by encryption in a way that can be seen by everyone and is ostensibly unchangeable. Without the aid of a bank or other financial intermediaries, individuals can conduct direct financial transactions using these currencies. 

They function on systems known as blockchains, which are collections of records of digitally signed transactions that show each time a cryptocurrency is transferred or spent. 

 Due to the synchronized copies that are kept on computers all over the world, which also make it extremely difficult to change, add, or remove blockchain records, blockchains are also referred to as distributed ledgers. 

IS BITCOIN HARMFUL TO THE ENVIRONMENT? 

A large amount of energy that crypto uses alarms researchers. According to research cited in a recent report by the White House Office of Science and Technology Policy, as of August 2022, the annual electricity consumption for cryptocurrencies was larger than individuals of countries like Australia or Argentina. 

But this issue isn’t unique to cryptocurrencies. The majority of that energy is used for mining, which is a computationally demanding procedure for authenticating blockchain transactions and distributing fresh coins as compensation to rival miners.   

It might result in unanticipated external effects. To the dismay of gamers, demand for computer graphics cards skyrocketed prior to the collapse in cryptocurrency values earlier this year, driving up prices and evaporating store shelves. These cards proved to be perfect for cryptocurrency mining rigs.  

WHAT ACTIVATES THE ETHEREUM CHANGE, THEN? 

The software upgrade primarily makes miners unnecessary. Ethereum now requires parties who want to assist in the validation of transactions to put some skin in the game by “staking” a certain amount of ether, the Ethereum coin, as opposed to the previous model where miners competed against one another to solve challenging cryptographic puzzles and earn new coin as rewards. 

A wider group of ether holders will then verify their work after parties from this pool are randomly selected to validate a block of transactions. A reward in either is given to successful validators, and it is typically inversely correlated to the size of their stake and the amount of time they have held it. 

IS THAT GOING TO HELP THE ENVIRONMENT? 

Although the Ethereum merger may not seem like much, it could have significant consequences. According to calculations made by economist and founder of the Digicon mist consultancy, Alex de Vries, the change will save Ethereum between 99% and 99.99% of its current energy consumption.  

He claimed that a relatively minor change to the code would have a significant effect on environmental sustainability. Ethereum was performing up to 900 billion calculations per second before the merger, but these calculations are no longer required. 

He calculated that the annual carbon dioxide emissions caused by Ethereum were around 44 million metric tons. If he’s right, these will now be greatly diminished. However, compared to Ethereum, bitcoin uses significantly more energy and emits more greenhouse gasses, and there doesn’t seem to be much interest in abandoning bitcoin mining. 

According to Lena Klaassen, co-founder of the German company Crypto Carbon Ratings Institute, which specializes in calculating the environmental effects of cryptocurrencies, the Ethereum merger was long anticipated and involved years of planning by its developer teams.