Bitcoin and other cryptocurrencies should follow Ethereum’s lead to be more sustainable: Expert
Dec 12, 2022, 17:12 IST
It is no secret that cryptocurrency has an expensive and persistent problem. As attractive as its benefits may be, the extravagant manner in which enthusiasts assemble their arsenal of perpetually-mining computers ends up consuming exorbitant amounts of power. Shockingly, some estimates even show that cryptomining emits carbon dioxide equivalent to a small country.
This is obviously undesirable. As cryptocurrency continues to thrive in popularity and evolve, we must vehemently measure each step before placing it. In climate action, ignorance is misery. And if Ethereum could reduce its electrical energy requirements by as much as 99.84%, experts reckon so could Bitcoin and its other competitors.
Just a few months back, Ethereum made a ground-shaking move called 'The Merge', which fundamentally changed how block rewards were handed out. This change from a 'Proof-of-work' system to a 'Proof-of-stake' system eliminated the incentives of having warehouses of computers to make you crypto-richer by simply making the process non-competitive.
"They have maintained a lottery component, but now with proof of stake, you actually have to acquire wealth, and you have to put up thirty-two Ether at minimum as collateral to become a block-producing validator," explains De Vries, a data scientist. "Then the software randomly chooses one of these stakeholders to make the next block for the blockchain. It does not incentivize the participants to compete on hardware."
However, the new problem was that Bitcoin miners began using the now-redundant servers for their mining operations and other energy-intensive tasks. Therefore, the energy saved from such a serendipitous move was just wasted.
"If those machines don't go off permanently, the energy savings from a global perspective aren't going to be aligned with the energy savings on the same network itself," notes De Vries.
As with most other climate mitigation strategies, regulation and responsible consumption will serve as the the saving grace here.
"Regulation would be helpful in getting the community to reconsider its current stance. The Bitcoin community has been very anti-change, but the Ethereum community has shown that despite concerns and resistance it is possible to make the necessary changes on a live blockchain, which means that the Bitcoin community may need a little bit of a nudge from the outside actually to make things happen," De Vries explains.
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This is obviously undesirable. As cryptocurrency continues to thrive in popularity and evolve, we must vehemently measure each step before placing it. In climate action, ignorance is misery. And if Ethereum could reduce its electrical energy requirements by as much as 99.84%, experts reckon so could Bitcoin and its other competitors.
Just a few months back, Ethereum made a ground-shaking move called 'The Merge', which fundamentally changed how block rewards were handed out. This change from a 'Proof-of-work' system to a 'Proof-of-stake' system eliminated the incentives of having warehouses of computers to make you crypto-richer by simply making the process non-competitive.
"They have maintained a lottery component, but now with proof of stake, you actually have to acquire wealth, and you have to put up thirty-two Ether at minimum as collateral to become a block-producing validator," explains De Vries, a data scientist. "Then the software randomly chooses one of these stakeholders to make the next block for the blockchain. It does not incentivize the participants to compete on hardware."
However, the new problem was that Bitcoin miners began using the now-redundant servers for their mining operations and other energy-intensive tasks. Therefore, the energy saved from such a serendipitous move was just wasted.
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As with most other climate mitigation strategies, regulation and responsible consumption will serve as the the saving grace here.
"Regulation would be helpful in getting the community to reconsider its current stance. The Bitcoin community has been very anti-change, but the Ethereum community has shown that despite concerns and resistance it is possible to make the necessary changes on a live blockchain, which means that the Bitcoin community may need a little bit of a nudge from the outside actually to make things happen," De Vries explains.