The second-largest cryptocurrency in the world, Ethereum, is anticipated to begin a technical transition tomorrow that could result in a 99% reduction in the crypto's carbon emissions once the transition is complete, according to a report by ScienceAlert.
Crypto's Contribution to Climate Change
Cryptocurrencies have been remarkably growing in recent years, but because of the massive quantity of electricity consumed by computers to control the buying and selling of crypto coins, they have also contributed significantly to climate change.
For instance, the largest cryptocurrency in the world Bitcoin is using more energy annually than countries the size of Argentina.
If the Ethereum transition is successful, there will be tremendous pressure on Bitcoin and other cryptocurrencies to deal with their large carbon contributions.
It is worth noting that digital currency systems known as cryptocurrencies allow users to send money directly to one another online.
Cryptocurrencies are not controlled from a central location like a bank, in contrast to conventional currencies. Instead, a "blockchain," a decentralized worldwide network of powerful computers, manages these currencies. These machines are called "miners."
About 150 terawatt-hours of electricity are used just by bitcoin each year. Around 65 million tonnes of carbon dioxide are released annually during the production of that energy, which is comparable to Greece's emissions, according to ScienceAlert.
According to research, emissions from bitcoin last year may have contributed to 19,000 future deaths.
Proof of Stake
In Ethereum's initiative, the "proof of work" concept will be replaced with the "proof of stake" approach.
According to this concept, users stake sizable amounts of blockchain tokens as collateral to authenticate cryptocurrency transactions. Users forfeit their stake if they are dishonest.
It will also eliminate the need for the extensive network of supercomputers currently used to verify transactions because consumers will be performing the very simple task of verifying transactions themselves.
The amount of electricity used by Ethereum will shrink by, on average, 99 percent once the computer miners are eliminated.
Certain minor cryptocurrencies use proof of stake, but it has only been used on the margins up until now. One example is the Ada token, which is traded on the Cardano platform.
Ethereum has been using test blockchains to execute the new concept for the past year. Now, the model will be integrated into the primary platform this month.
If the transition is proven successful, it could pressure Bitcoin and other cryptocurrencies to drop the proof-of-work concept or risk going offline.
This pressure has already started, according to ScienceAlert.
Elon Musk, the CEO of Tesla, declared last year that due to Bitcoin's carbon footprint, his company would no longer accept Bitcoin payments for its electric vehicles.
In June, the New York state legislature approved a bill that would have outlawed some Bitcoin activities that rely on carbon-based energy. The decision, though, needs the approval of New York's governor and might face a veto.
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Written by Joaquin Victor Tacla
