Ethereum stops wasting more energy than Chile uses

The world’s second largest cryptocurrency is on the verge of a transformational overhaul. Within hours, “the meltdown” will take place and the Ethereum network will eliminate 99.95% of its monstrous power consumption of approximately 78 terawatt hours per year.

Cryptocurrencies like Bitcoin and Ether are not managed by any bank or government. There is no central authority to decide whether a given transaction is legitimate or fraudulent – ​​instead, the task of validating transactions and recording a traceable history for each unit of this e-money is decentralized. For decentralization to work, validators must be confident that they are doing their job honestly and faithfully. And to be trusted, these people need to have skin in the game, something to lose if they’re caught cheating.

“The Merger” – just hours away at the time of writing – is widely regarded as one of the greatest moments in crypto history. Ethereum is on the verge of moving away from its “proof-of-work” trust model, in which its blockchain validates transactions and ownership through the “labor” of crypto miners running exorbitant amounts of electricity through cryptocurrency banks. stacked graphic cards, earning ETH currency in the deal. This “work” – a series of very complex but ultimately useless calculations – proves that miners have invested capital in their position as network validators. It’s their skin in the game, the money they put in to prove they’re trustworthy.

The new model is known as “proof of stake”. Under this model, anyone who stakes a minimum of 32 Ether tokens (valued at just over $50,000 at current rates) can become a validator. For each transaction, a group of validators is selected to perform a much less energy-intensive version of the mining process, and a consensus is reached. Any validator who acts dishonestly or does the job incorrectly can have their staked Ether confiscated as punishment – ​​so there is still a considerable financial incentive to play by the rules.

Switching to the new model is an extremely complex and potentially risky decision. The Ethereum network is decentralized, so it’s not as simple as updating software on a single data center. But the move to proof-of-stake has been planned since the network’s inception, and since late 2020 a “beacon chain” proof-of-stake network has been running alongside the main Ethereum blockchain, extensively testing the new model. When “the merge” happens, the network hot-switches the beacon chain for validation, and in theory, nothing should stop or be disrupted.

There are implications for security, for decentralization, and for the future functionality of the Ethereum blockchain, which is expected to expand in a series of later upgrades called “the surge”, “the purge”, “the edge ” and “madness”. .” And there are certainly risks – a move of this magnitude from a cryptocurrency of this magnitude (the entire network is worth nearly US$200 billion at this point) is unprecedented. really knows what it will do to the value of ETH, or what it will do to the crypto space as a whole.

But one thing seems certain: the tap is about to be turned off on an ungodly and objectively terrible waste of energy for the planet. Whatever else you think about cryptocurrencies, putting 78 terawatt hours a year through hot GPU banks with no practically useful purpose is absolute travesty as humanity marshals its resources for an existential battle against climate change. “The Fusion” is about to flip the switch on an energy drain bigger than the countries of Israel, Chile, Austria or Venezuela, and it’s an incredible achievement – even whether the network has dumped hundreds of terawatt hours into global toilets so far.

This move, however, does nothing to combat the biggest climate criminal in the crypto space. The bitcoin network remains on the proof-of-work model, and its total energy consumption rate is estimated to have reached an incredible 200 TWh/year during the first half of 2022. A single bitcoin transaction is estimated to produce a grotesque 776, 30 lbs of CO2 emissions, and uses enough electricity to power an average US home for just over 47 days. A single transactionmuch of the electricity comes from the cheapest markets in the world.

And again, to what end? To power hundreds of thousands of computers into crypto-mining bays as they perform essentially useless calculations, just to prove that miners have spent enough money on power and GPUs to be trustworthy validators for blockchain. Nothing is created, and there is no other economic value to this activity. It’s hard to consider this anything other than obscene, and the Bitcoin network has no plans to move to proof-of-stake, or any other model, at this point.

Still, this is a critical time for crypto, and anyone who cares about the environment should hope it works out well for Ethereum. Learn more in the video below, and you can Google to see a countdown to when this historic swing occurs.

ETHEREUM MERGE – Crypto’s Most Anticipated Event Explained