Ethereum is the second biggest crypto after Bitcoin. An open-source blockchain, it dates back to 2013 and has rapidly increased in popularity in recent years, with plenty of people purchasing it as their first investment into crypto, and other seasoned Bitcoin purchasers using it.
As it is the second largest cryptocurrency, it’s no surprise that it used to use the second largest amount of power out of all the cryptocurrencies. In fact, it used 23 million megawatt-hours of electricity per year, which is about the same as a small country.
But this is now a thing of the past, thanks to The Merge. Even though Ethereum is still the second biggest cryptocurrency, it now uses far less energy.
So, what is The Merge? It’s a huge shift to become 99.9% more sustainable. How? We’ll go into it in this article.
Why was The Merge necessary?
While cryptocurrencies have become increasingly popular in recent years, many people have argued that the coins are incredibly environmentally harmful and can cause a real detriment to the already impending climate crisis.
This is because the “mining” of various blockchain currencies can use a lot of fossil fuels, far more than is used for other day-to-day activities. This is especially prevalent with Bitcoin. Some smaller cryptocurrencies are more eco-friendly, but Ethereum is notably the biggest.
When did Ethereum decide to go green?
According to Vitalik Buterin, Ethereum’s co-founder, the cryptocurrency was always supposed to be green – they had planned it since 2014 – but the vision was held back quite a few times because it was such a big mission.
However, The Merge itself only happened in 2022.
What actually is The Merge?
It sounds very looming and domineering, but The Merge is just what it says on the tin – a merge with another chain.
Historically, Ethereum worked on the Proof of Work blockchain. This is a database that was updated and managed by volunteers around the globe. These volunteers aren’t paid but receive new Ethereum coins. This is crypto mining and can be quite environmentally damaging, as the sheer amount of energy used to gain these coins is colossal.
The merge is quite literally a move to merging with the Beacon Chain which uses Proof of Stake rather than Proof of Work.
Proof of Stake uses much fewer computers and each computer uses a lot less power. This is because people can use their own laptops or desktop computers rather than specialized computers which have GPUs.
What happened to the crypto miners?
Unfortunately, this does have one group that is now struggling – the crypto miners. They are now looking at selling their GPUs, as it’s likely that they won’t need them in the future.
Plus, the entire act of crypto mining is now much less lucrative, meaning that a lot of people who relied on this source of income are now much less crypto-rich.
Some crypto miners are instead starting to go into Bitcoin mining, whereas others are looking at mining coins that aren’t currently as popular.
It’s not a great time to be an Ethereum miner, but many environmentalists argue that it was essential to stop the incredibly unsustainable way that the crypto used to be mined.
How will this affect crypto in general?
There are a few ways that this could affect crypto on a more general basis.
Firstly, the Ethereum blockchain isn’t just for the Ethereum currency. In fact, lots of smaller coins use the same blockchain, as well as some NFTs and other crypto products. So, this means that the whole world of crypto, from trading to crypto casinos, might be affected.
However, it’s unlikely that the consumer will see much change at their end, as the value of the coin is still the same – it’s just the process that has changed. If more people choose Ethereum thanks to The Merge, it could have more success than other cryptos, but that remains to be seen.
There aren’t currently any known plans for Bitcoin to become more sustainable (although, if Ethereum’s shift is a success, they may well follow suit in the future!). It will be interesting to see if people who currently use Bitcoin – the biggest cryptocurrency – actually move over to Ethereum as a result.
It’s great that more and more companies, Ethereum included, are becoming more environmentally conscious, and the decrease in emissions is shocking. This could be the start of a much more sustainable world of crypto, which is an exciting step into a more sustainable future!
*This article has been paid. The Cryptonomist didn’t write the article nor has tested the platform.