Enthusiasts hope a greener ethereum will spark wider acceptance
INA FASSBENDER
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Senior figures in the crypto world said on Thursday that one of the biggest software upgrades the sector has ever seen was completed, an overhaul of the Ethereum blockchain aimed at reducing its huge energy consumption.
Developers had spent years working on a more energy-efficient version of Ethereum, a digital ledger that underpins a multibillion-dollar ecosystem of cryptocurrencies, digital tokens (NFTs), games and apps.
“And we finished!” tweeted Ethereum co-creator Vitalik Buterin, calling it a “big moment for the Ethereum ecosystem”.
Ethereum is the second most important blockchain after bitcoin, but it has faced criticism for burning through more power each year than New Zealand.
Buterin cited research that claimed the “merger,” as the developers have called the software upgrade, would reduce global energy consumption by 0.2 percent.
Enthusiasts hope a more energy-efficient Ethereum will spur wider use, particularly as a way to enable banks to automate transactions and other processes.
But so far the technology has largely been used to create speculative financial products.
And critics remain skeptical of the claims of massive energy savings, pointing out that it is unclear how much energy the new system will need.
The transition changes the way transactions are logged on the Ethereum blockchain.
Since the start of Ethereum in 2015, so-called crypto miners have competed against each other to solve equations – a system known as “proof of work”.
The process required enormous computing power and only the winner would be chosen to update the blockchain and get rewards.
The new system scraps the competitive element, the miners and their energy-guzzling computer stacks.
Instead, “validators” will now be selected in a lottery-like system.
Instead of solving an equation, they put up 32 ether (worth $55,000) – Ethereum’s cryptocurrency – and wait to be chosen in a system known as “proof of stake”.
Blockchain company Consensys called it a “monumental technological milestone” and the biggest update to Ethereum since its launch.
The world’s largest crypto exchange, Binance, had stopped trading ether during the merger process.
“The Ethereum merger is complete,” the firm tweeted Thursday morning, saying it was resuming trading of ether.
The upgrade is likely to face a rocky start as cryptominers have already pledged to continue running the old mechanism on a smaller blockchain “forked” from the main Ethereum chain.
Bitcoin is the last major blockchain to use the energy-intensive mining process that requires rows of energy-guzzling computers
Mark Felix
And even if the “merger” is successful, Ethereum will still face major hurdles before it can be more widely adopted.
For example, it is expensive to use and the update will not reduce the fees.
And the broader crypto sector remains plagued by wildly fluctuating prices, security flaws and fraud.
