By changing the way the cryptocurrency Ethereum, it is possible that electricity consumption could be reduced nationwide. The amount of electricity saved is similar to Ireland and Austria, suggests a paper published in the data science journal Patterns.
Bitcoin, the largest cryptocurrency, is believed to consume more electricity than Finland. It has even been suggested that Bitcoin emissions could exceed the global savings currently achieved from driving EVs, the article states.
Like all cryptocurrencies, Ethereum relies on the blockchain. A blockchain is a huge, constantly updated database that records all transactions. Previously, this was maintained and verified by a system called Proof of Work. This system is used by many cryptocurrencies, including Bitcoin. New cryptocurrency coins were awarded to companies and volunteers whose computers helped run the network.
The more work you complete, the higher your chances of creating new coins. This has led companies to set up huge warehouses with computers that run 24/7, often powered by fossil fuels, the article suggests. however, at an event called The merge on September 15th, Ethereum switched to a system called Proof of Stake. With this system, the possibility of creating new coins is no longer dependent on the amount of computational work done.
The technical complexity of the switch can be compared to rebuilding the foundation of a skyscraper while standing. However, a peer-reviewed Perspective suggests that it reduced Ethereum’s power consumption by at least 99.84%. The Ethereum blockchain also supports other coins and crypto products such as non-fungible tokens (NFTs) worth hundreds of millions of dollars. But Alex de Vries, author of the paper and a data science and economics researcher at the VU University Amsterdam in the Netherlands, warns that computers may have simply switched to creating other cryptocurrencies.
In September 2022, the White House Office of Science and Technology Policy said legal restrictions on energy-intensive cryptocurrency mining should be considered.
Mr. De Vries said: “The Bitcoin community has been very anti-change but the Ethereum community has shown that despite concerns and resistance, it is possible to make the necessary changes on a live blockchain, which means that the Bitcoin community may need a little bit of a nudge from the outside to actually make things happen.”
Gavin Brown, associate professor at the University of Liverpool, told BBC News: To achieve this, the new regulatory outlook is an important instrument. However, it has been profitable for Bitcoin and Ethereum enthusiasts to clean up their acts in order to attract money from institutional investors such as banks and pension funds. “A lot of this money may want to invest in crypto right now, but won’t be able to do so until crypto is more sustainable,” he said.
De Vries also argued that “blockchain-based systems remain relatively inefficient compared to centralized alternatives,” and that the Ethereum community has raised concerns over environmental concerns regarding crypto assets. He warned that it was too early to declare “complete victory”.
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