As the crypto industry becomes mainstream this year, its fundamentals have also come to the fore.
Among the most cited is the high energy consumption of the oldest and most popular blockchains, including Bitcoin and Ethereum, due to their use of the Proof of Work consensus mechanism.
Sustainability or security?
These issues were particularly acute this year as the rise of the DeFi and NFT sectors led to an increase in Ethereum usage. In fact, it brings with it traffic that the network may not be able to handle.
In a recent blog post, the platform found
“The current energy consumption of Ethereum is too high and not sustainable. Addressing energy consumption concerns without sacrificing security and decentralization is a significant engineering challenge. “
Amid the backlash, Ethereum is currently promoting a greener ecosystem with the move to a Proof of Stake consensus mechanism that uses significantly less energy than PoW.
Since it eliminates the need for miners and instead replaces them with validators who mark their own ETH as a form of trust, the need for high computing power becomes meaningless.
Several competing blockchains, including Polkadot, Cardano and Avanalche, already use this mechanism and therefore have significantly lower fees and transaction times.
Ethereum’s PoS-based beacon chain has been live since late 2020, and the network is expected to fully take over by the second quarter of 2022. In the meantime, the Ethereum chain has provided glimpses of the future after the consolidation.
PoW to PoS is the way forward
In addition, according to the blog post mentioned above, the merger with PoS can result in a 99.95% reduction in total energy consumption and the mechanism will be 2000 times more efficient compared to PoW.
“Ethereum’s energy costs will be roughly the same as running a home computer for every node on the network.”
According to a Digiconomist report, an ETH transaction in PoW is now equivalent to the electricity consumption of an average US household in 7.44 days.
The post also recommends a “realistic estimate” for split Ethereum transactions after merging with rollups that reach 25,000-100,000 transactions per second (tps). That means it takes the network about 4 seconds to complete 100,000 transactions, which uses about 0.667 kWh of energy.
“That’s ~ 0.4 percent of the energy Visa uses for the same number of transactions, or ~ 225 savings in energy consumption compared to Ethereum’s current proof-of-work network.”
Interestingly, a single ETH transaction now consumes as much energy as 100,000 VISA transactions.
While it’s impossible to gauge the future of the post-merge network in relation to its ESG goals, Beacon Chain has caused trouble on another track.
A new Twitter user emphasize that the chain’s contract is the largest single Ethereum contract, containing 8,641,954 ethers and valued at over $ 34 billion at press time. According to the report, this must not be “sent or issued”.
DISCLOSURE: 8,641,954 ETH ($ 32 billion) is stuck in one of the largest Ethereum contracts and cannot be sent or spent. Requires a hard fork that has not been written or specified. The timing and conditions of the hard fork are still unknown. https://t.co/xcXPwbS93v
– Tomer Strolight | Stimulating Bitcoin Art (@TomerStrolight) December 14, 2021
While the network may need an unknown hard fork to save the funds, the large amount of ETH that has been deployed suggests high demand and confidence in the consolidation of ETH 2.0.