The Ethereum blockchain completed a significant software upgrade, significantly lowering its power consumption, and Ethermine, the top Ethereum mining pool operator in the world by computational capabilities, closed down its facilities for miners.
What is Ethereum?
Following Bitcoin, Ethereum has become the most widely used cryptocurrency. However, it serves as more than just a means of transaction or a repository of wealth. In general, Ethereum is described as “a distributed public ledger with smart contract capability that is decentralized and open source.”
The Ether (ETH) token powers the Ethereum network, which was established in 2015 by Vitalik Buterin and Gavin Wood. Through this network, users may conduct transactions, trade in cryptocurrencies, purchase, and store NFTs, and more. It serves as a platform for the development of decentralized apps and exchanges.
What is Ether mining?
Over the past few years, ether mining has grown into a multibillion-dollar industry. The game involves miners competing with one another to be the first to complete mathematical challenges and receive a token reward.
Mining pools like Ethermine combined processing capacity from a number of miners before dispersing the incentives among the miners to raise the chances of winning Ether. The business typically charged a fee for its services.
Investors and environmentalists have criticized most blockchain systems since they consume a significant amount of energy. According to researcher Digiconomist, well before the software update, one Ethereum operation required as much power as a regular US household consumes in a week.
What is the new ‘merge’?
The cryptocurrency Ethereum has the ability to significantly cut down on both its energy use and the accompanying climate-related emissions with a complicated software upgrade. However, “the merge” as a transition won’t be sufficient on its own.
The lengthy process known as “The Merge” converts the blockchain’s proof-of-work (PoW) consensus method to proof-of-stake (PoS). Due to the decentralized nature of Ethereum, there is no centralized authority, such as a bank, to approve and verify transactions between two individuals. As a result, the platform employs PoW as its consensus technique, which involves having consensus and transaction validation from every network participant. The network’s users, known as miners, carry out this validation.
All of the miners strive to figure out complex mathematical challenges, and the first to accomplish this becomes the validator, adding the latest block to the blockchain. Mining is done utilizing computers utilizing hardware that uses a significant amount of electricity.
The role of a validator is uncontested in PoS, on the other hand. An algorithm chooses a validator at random from a set of individuals who “risk” their coins. As a result, there is no longer a need for miners.
Vitalik Buterin, the creator of Ethereum, tweeted on Thursday afternoon, “Happy merging to all.” The entire cryptocurrency sector honored the occasion globally. On Twitter, the hashtag #Ethereummerge was trending. The “Ethereum Mainnet Merge Viewing Party” on YouTube attracted more than 40,000 viewers.
Why is it termed ‘The Merge’?
In 2020, Ethereum unveiled a PoS network known as the Beacon Chain. However, it is not yet used to handle transactions. The Beacon Chain must be joined with the mainnet, or PoW-operating network, of Ethereum in order to finish modifying the consensus method. Thus, the name “The Merge.” The Merge is “the idea of switching out an engine from a driving car,” according to a researcher who spoke with CoinDesk, a global platform for crypto news.
How will it benefit the environment?
The Ethereum merging might not seem like much, but it might have serious ramifications. According to calculations made by analyst and creator of the Digiconomist firm, Alex de Vries, the change will save Ethereum approximately 99% and 99.99% of its present power consumption.
He claimed that a relatively minor alteration to the code would have a significant effect on environmental sustainability. Up to 900 billion calculations per second were being performed by Ethereum prior to the merging, however, these calculations are no longer required.
His estimations indicated that Ethereum was annually responsible for around 44 million metric tonnes of carbon dioxide emissions. These will now be significantly decreased if he is right.