After years of waiting, the cryptocurrency Ethereum has finally launched a significant network upgrade that completely changes how the blockchain processes transactions, mints new tokens, and secures its network. This process, known as proof-of-stake, has reduced Ethereum’s energy use by over 99%.
Energy consumption has long been a source of dispute in the bitcoin community. However, bitcoin is unlikely to follow suit. Instead, the bitcoin network will continue to use a mechanism known as proof-of-work. In this method, highly specialized computers attempt to guess a winning number that will be used to confirm transactions and create a new currency. This is called mining. Currently, it takes more than a hundred sextillion attempts to guess a winning number. All of this work helps to secure networks. It makes it nearly impossible for any bad actor to gather enough computing power and grab control. However, mining Bitcoin would consume 75.4 terawatt hours of electricity in 2020, which is more than Austria or Portugal combined.
This is the former system utilized by Ethereum. However, the network has substituted validators for miners. Validators are tasked with confirming new transactions and earning ether as a reward, rather than engaging in a massive computational guessing game. To ensure that these validators are acting truthfully, they must effectively place a security deposit into the network. This is done by staking a certain quantity of ether currencies. If a validator tries to attack the network, its stake is lost. According to Ethereum supporters, the penalty will make the network more safe, whereas bitcoin supporters argue that proof-of-work is the more secure, tried, and proven method.
However, in the midst of the worldwide ecological crisis, the network is wrestling with the optics of bitcoin’s energy use. As a result, some famous bitcoin miners are looking for renewable energy to power their data centers. Others are working to flip the narrative by presenting bitcoin’s energy use as an asset, as it helps force investment into the country’s outdated electrical grid.