![]() ![]() If it proves successful, regulators will probably see no reason why Bitcoin and other wasteful cryptocurrencies should not follow suit.Ethereum developers today executed the "Merge," an upgrade that eliminates mining and dramatically reduces the energy consumption of the world's second-biggest cryptocurrency. Miners are otherwise free to migrate to other chains, or operate from countries with weak environmental regulations, rather than adopt more sustainable practices.ĭuring an energy crisis and climate emergency, Ethereum’s switch to a more efficient technology is good news. Bitcoin miners, therefore, tend to be protective of their investments and resist changes to the status quo.įor cryptocurrency networks that cannot clean up their act, a global regulatory crackdown on proof-of-work mining is required. Bitcoin mining is done by commercial mining companies that have to invest heavily in specialist hardware. Mining the number one cryptocurrency has become so competitive that the cost of entry can be up to US$1.8 (£1.55) million. Responsible for an estimated 70 million tonnes of CO₂ a year, Bitcoin remains the dirty elephant in the room. This would reduce Ethereum’s carbon footprint, but redistribute crypto’s carbon headache around the network. While soaring energy bills could discourage the mining of an unpopular Ethereum fork, miners, in this case, may migrate towards more established proof-of-work networks. Large exchanges, such as FTX and Coinbase, have confirmed that they will allow users to trade forked Ethereum tokens. However, the market is far from conclusive in its support. Opensea, the largest marketplace for collectable crypto assets, says it will not list any other kind of Ethereum digital artwork. Many exchanges broadly support Ethereum’s proof-of-stake chain. These forks will replicate the existing network, allowing subsets of the community to continue mining. Several prominent crypto traders have repeated their support for proof-of-work mechanisms.Īlternative versions, called “forks”, that ignore the software update are therefore highly likely. Yet, despite the regulatory risk, the movement to keep Ethereum’s proof-of-work mechanism alive is gathering momentum. While a proposal to ban proof-of-work mining failed to win EU approval earlier this year, an imminent crackdown looks inevitable. ![]() This is particularly true in Europe where the transition away from Russian energy dependence is biting hardest. The energy crisis is also prompting regulators to act on energy-intensive industries. However, the global energy crisis and crumbling crypto markets have made it far less lucrative than previously. ![]() Proof-of-work mining has up to now proved very profitable. But progress has been slow, leading many to believe the merge might never happen. Ethereum’s developers have consistently repeated claims of an imminent shift. To uphold security, crypto owners in these networks vote for the most qualified validators.Īs it is written into the project’s “ development roadmap”, Ethereum’s journey to proof of stake has always been likely. However, several networks, including Cardano and TRON, already use a proof-of-stake method. Many fear that the merge might consolidate control of the network in the hands of wealthy investors while weakening its security. While being more efficient, proof of stake also reduces network congestion while being cheaper for users.Īdvocates for proof of work argue that proof of stake is an unproven alternative. Proof-of-stake networks are typically assembled around 20 machines, using a comparatively small amount of energy. But if they validate fraudulent transactions or otherwise defy network rules, they lose their stake. ![]() Do the job well, and the validator is rewarded with even more crypto. Rather than competing, validators are selected to mine. Ethereum requires users to stake a minimum of 32 Ether tokens. Cryptocurrency owners instead offer their own coins as a security deposit for the chance to become validators. The proof-of-stake process reduces the need for energy-intensive processing equipment to validate transactions. A single Ethereum transaction is responsible for the same amount of energy used the average US household in a week. ![]()
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