This Tuesday, the creator of Ethereum – Vitalik Buterik – confirmed that the change is almost completely completed and the cryptocurrency will now be mined in a new, more environmentally friendly way. As CNBC points out, the change is similar to the transition from dial-up Internet to fiber connectivity.
Until now, Ethereum and Bitcoin used the same algorithm to validate them on the blockchain.
The method is called Proof-of-work (PoW) and is one of the reasons why cryptocurrency mining consumes such monstrous amounts of electricity. After the change, according to Buterik, mining his virtual currency will consume over 99 percent less energy, automatically making the cryptocurrency far greener than its competitors.
“This is a big moment for the Ethereum ecosystem,” the entrepreneur wrote on his Twitter account. That the change was eagerly awaited was evident as early as two months ago, because the moment the transition was announced, the price of the cryptocurrency doubled.
The new way of mining is called Proof-of-stake (PoS), and this model for confirming transactions is far more economical from an energy point of view. The PoW strategy works on the principle of a competitive number-guessing game, where the first participant to solve the puzzle receives a certain amount of cryptocurrency.
The model requires computers connected to a global network to work at the same time when the transaction takes place. It is this that absorbs huge amounts of energy.
PoS, on the other hand, doesn’t need as much energy-intensive hardware to carry out transactions because much of the effort is done by software.
The software helps miners guess combinations of numbers with the same speed and makes it so that super-powerful machines are not needed to acquire cryptocurrencies. From then on, the more Ethereum coins a user accumulates, the more chances they have to acquire more and more.
In other words, while until now powerful processors and video cards were needed to validate transactions in the blockchain, now with Ethereum only a solid initial investment (stake = pledge) will be needed to guarantee the transfers.
This investment will amount to about $55,000 or 33 Ethereum coins, which automatically makes the cryptocurrency even more inaccessible to hackers who don’t have the funds in question. Yes, the blockchain is never completely safe from hacker attacks, but in this case, it will have one more serious barrier to jump.
Currently, Ethereum mining consumes 72 terawatt-hours per year, or exactly as much electricity as it takes to power the Netherlands. Therefore, greener “mining” for most specialists is a step in the right direction.
The big question remains whether the “Merger” is enough to dislodge Bitcoin from the top spot among cryptocurrencies.
“Bitcoin will always be electronic digital gold,” economist Eloisa Marchesoni told Euronews. In her opinion, no one will move their investments from the most popular cryptocurrency to Ethereum.
According to Marchesoni, however, the virtual currency’s new mining model will inspire other cryptocurrency creators to change their algorithms.
In addition, the “Merger” may lead countries in the coming years to impose stricter regulations on the more conservative way of acquiring cryptocurrencies in an attempt to slow down climate change at least a little.