The world’s second most important cryptocurrency, ether, has switched to a new, greener operating model.
Until now, cryptocurrency “mining” (the process of creating or transacting a unit, which involves the simultaneous use of many computers) consumed the same amount of energy as the Netherlands, according to the Ethereum Foundation. With the transition being called “fusion”, its managers say that energy consumption will be reduced by 99.9%.
While cryptocurrencies have been a business revolution, their impact on climate change is huge due to the amount of electricity used by the computers that manage their trades.
The move to the new model, says Vitalik Buterin, co-founder of Ethereum (the digital platform whose currency is ether), has been on the horizon since the cryptocurrency launched in 2014, but has been delayed due to the technical complexity involved. It’s like rebuilding the foundations of a skyscraper that is already standing.
The transition took place in the early hours of this Thursday (15/9). Analysts are still watching whether the merger was successful. Should there be any problems, this could significantly compromise the cryptocurrency ecosystem, impacting investors large and small across the world. But if all goes well, consumers shouldn’t notice any changes.
Why Cryptocurrencies Are So Polluting
Unlike traditional currencies, cryptocurrencies are a digital currency system where people make direct online payments to each other and there is no central bank. Instead, transactions are managed in what is known as blockchain.
THE blockchain is a decentralized global network of high-powered computers that allows you to create or “mine” digital currencies. And, until now, this has been done through the model known as “proof of work”, or PoW system. The model works as follows way: for A to make a transfer to B in cryptocurrencies, he sends a message to the network, which is added to other messages from other transactions. Together they form a “block” that is converted into an encrypted code. In turn, each “miner” competes with the others to try to solve that code and are rewarded with new coins for that work. Once the operation is resolved, it is verified by other miners and the transaction is confirmed. Due to this complexity, the process requires a lot of calculations and a lot of computer time. So a lot of energy.
How Ethereum is changing to be greener
What will change from now on is that the blockchain of the PoW system will be merged (what they called the merge or “the fusion”) with a carbon copy called the Beacon Chain. Behind this name is the new encryption system for Ethereum’s cryptocurrencies: the “proof-of-stake” or PoS system. blockchain. Cryptocurrency miners are replaced by a smaller number of transaction “validators”.
In addition to reducing energy demand, the PoS system reduces the amount of coins given as rewards — which is how digital currencies are generated.
Another change is that laptops and desktops can be used with this system, instead of the powerful GPUs (data processing units) that were used until now. It was announced that adopting proof-of-stake will reduce energy consumption by about 112 terawatt hours per year to 0.01 terawatt-hour per year.
The “fusion” as a whole is expected to save a great deal of energy per year, around Chile’s energy consumption.”It’s really exciting and a great achievement. Yes, there are jitters in the sense that things probably won’t will run 100% well, but that’s to be expected,” says Justin Drake, a researcher at the Ethereum Foundation.
“We have an infrastructure now that allows us to continue even if parts of the network go down for whatever reason.” As a result of the “merger,” some analysts expect ether to overtake bitcoin, the top cryptocurrency by market cap, as the leader in terms of of total value of all currencies.
The other side of the coin is that cryptocurrency miners will have to find a new way to make money from their equipment, or sell it. Some reports suggest that GPU sales have already started. Cryptocurrency mining company Prima Technologies, with Dubai-based company is investing tens of thousands of dollars to replace its ether-mining GPU computers, now prioritizing even more expensive and power-hungry devices — but capable of extracting bitcoins.
“It is difficult as no other PoW currency is as profitable as Ethereum,” said spokesperson Ammar Lashkari. “We will keep some of our Ethereum computers and start mining alternative currencies, but it will not be the same, so we will slowly diversify into bitcoin mining.” In Staffordshire, UK, Ash Andrews hopes to still profit from mining other currencies. using their existing equipment. “I have mixed feelings about the merger. It’s been a quiet time for us miners just mining Ethereum, and now we’re going to have to switch to another currency. That’s a lot of changes,” says Andrews. Some are more optimistic about the future of GPU mining.
Josh Riddett, CEO of Manchester-based Easy Crypto Hunter, thinks mining less popular coins will end up being profitable.”During the Ethereum price spike, every mining rig we had was making $150 a day, which is pretty crazy. Yes, we’re going through a period of lows, but who’s to say what other currencies might be worth three or five years from now?”
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