A new upgrade to Ether will help in reducing its energy consumption significantly. Here’s how mining crypto can be environmentally friendly.
Basics: What is blockchain? Why does it consume a lot of energy?
Blockchain, a digitally distributed database has the ability of recording transactions. This makes each and every transaction immutable and transparent. Hence, is it impossible to change or tamper with There are several types of blockchain-based usage. Bitcoin and Ethereum are the major blockchains. Bitcoin Blockchain is secure, robust, and fast. However, it is expensive. On the other hand, Ether is slow but cost-effective. They both require energy since chains of private networks are vital for authenticating transactions.
As per data from Digiconomist, Ethereum consumes around 112 terawatt-hours of electricity annually. This is more than the amount of electricity used by Pakistan or the Philippines in a year. Energy used by one Ethereum transaction can power an average US household for more than nine days. Bitcoin is worse and uses around 137 terawatt-hours of electricity every year.
Mining Ether will soon be ‘greener’
Ethereum is announcing a major update. This can save up to 99.95 percent of the energy used. Ethereum is the blockchain technology behind Ether, a popular cryptocurrency. According to the company, this move will “Proof-of-Stake (PoS) mechanism away from the existing Proof-of-work (PoW)”. With this, “the energy expenditure of Ethereum will be roughly equal to the cost of running a home computer for each node on the network,” claims the firm.
PoS and PoW are two methods of mining cryptocurrencies. In the PoW mechanism, thousands of computers are needed and they use a high amount of electricity. Legacy cryptocurrencies like Bitcoin use the POW mechanism, unlike the new update for Ether. However, with PoS, anyone with crypto can use their tokens as collateral for developing blockchain. Additionally, it rewards the user with a fixed percentage as returns when a new block. This is also known as staking cryptocurrency. PoS is also better since it does not need special mining equipment. However, more data is needed to understand and improve since it does not offer as much security. “Ethereum is in so much trouble…ensuring security is becoming harder and harder,” stated Alyse Killen. Kileen is the founder of Stillmark, a Bitcoin-focused venture.
