Ethereum, the NFT market’s blockchain of choice, reduces CO2 production by 99%
A long-awaited moment in the crypto world is finally here: Ethereum, the world’s most widely used blockchain – and the one favored by the lion’s share of the NFT (non-fungible token) market – today completed a software update that will drastically reduce energy consumption.
Dubbed “The Merge”, this transition has significantly changed the security system underlying the Ethereum blockchain, which is home to the world’s second largest cryptocurrency Ether (traded as ETH). Its completion was confirmed today by Ethereum founder Vitalik Buterin on Twitter.
As a result, Ethereum’s electricity usage is expected to drop overnight by a whopping 99.988%, and its carbon emissions by 99.982%, according to a report published today by the research company Crypto Carbon Ratings Institute (CCRI). The report estimates that before The Merge, Ethereum used 23 million megawatt hours per year. Going forward, it will be only 2,600 megawatt hours per year.
Like most other blockchains, Ethereum’s energy usage has drawn criticism and concern from crypto-skeptics and evangelists alike. It was estimated earlier this year that it used as much energy per year as the Netherlands and more than either the Philippines or Pakistan.
How does this work?
Until today, Ethereum used a system known as “proof of work” to determine the validity of transactions on the blockchain. This involved network participants solving complex math problems to validate new blocks. Because this method requires computing power from so many different servers, it consumes a lot of energy.
This system is now almost replaced with a new one called “proof of stake”, where transactions are validated by a group of individuals and companies who have staked their own tokens as collateral for the network’s security. This process requires far fewer people to constantly validate blocks on the chain, and therefore uses far less energy.
Plans to switch to proof of stake have existed since the early days of Ethereum in 2015, and were published by the blockchain’s founders following widespread criticism of cryptocurrency and NFTs for their environmental impact.
What does this mean?
For those in the art world inclined towards NFTs, this shift will have a positive effect as Ethereum is the blockchain most commonly used to mint and trade NFTs, meaning their energy footprint has been cut. While other blockchains have been released that promised similar reductions in carbon emissions, they tended to still rely on the Ethereum network and were much less popular.
The removal of a major hurdle for some potential NFT users who may have been hesitant due to the format’s carbon footprint could be a timely boon for the market, which has fallen significantly. this year after the dizzying highs of 2021.
Meanwhile, it is no longer necessary, or indeed possible, to mine Ether on the Ethereum network, as one still can with Bitcoin. This has caused mines such as Ethermine to announce their closure.
