Ethereum, the cryptocurrency and blockchain platform, is to accelerate its net zero ambitions by changing its core operating algorithm.
Ethereum is to change its proof-of-work algorithm to an energy efficient proof-of-stake algorithm and doing so will reduce energy consumption by ~99.95 per cent the company has announced.
Swapping Ethereum to proof-of-stake, where the real-world value invested comes from ETH staked directly in a smart contract, removes the need for miners to burn energy to add to the Blockchain and the environmental cost of securing the network is drastically reduced and the energy consumed by the network will drop to <0.05% of its pre-merge amount.
Proof-of-stake uses validators instead of miners. Validators perform the same function as miners, except that instead of expending their assets up-front as energy expenditure they stake ETH as collateral. Since almost all of the energy expended comes from the mining algorithm, switching to proof-of-stake dramatically reduces energy expenditure.
Estimates based on the current Beacon Chain suggest that change to proof-of-stake could result in a 99.95% reduction in total energy use with proof-of-stake being ~2000x more energy-efficient than proof-of-work. The energy expenditure of Ethereum will be roughly equal to the cost of running a modest laptop for each node on the network.
Digiconomist provides whole-network energy consumption and carbon footprints for digital currencies. Ethereum’s total energy consumption is ~112 TWh/yr, comparable to that of the Netherlands, with a Carbon emission equivalent to that of Singapore (53 MT/yr).
For comparison, Bitcoin currently expends about 200 TWh/yr of energy and emits about 100 MT/yr C, while generating about 32,000 T of electrical waste from obsolete hardware annually. Switching off Ethereum proof-of-work in favour of proof-of-stake will reduce this energy expenditure by more than 99.95%, implying that total energy expenditure for securing Ethereum is closer to 0.01 TWh/yr.
This compares to the energy consumption involved in mining gold, which has been estimated to expend about 240 TWh/yr, PayPal at 0.26 TWh/yr) and Netflix at about 0.45TWhr/yr, according to Carbon Brief. Alternatively, Ethereum could be compared to Youtube which has been estimated to expend about 244 TWh/yr.
The urgent need to reduce the carbon footprint of cryptocurrencies was highlighted in 2021 when it was reported that the entire Bitcoin network, for example, could consume almost the same amount of energy as all of the world’s data centres combined.