The world’s second largest cryptocurrency underwent a transition dubbed ‘The Merge’ in September, which commentators at the time described as “the most consequential event in crypto history” after the creation of bitcoin.
It involved a switch from a proof-of-work (PoW) to a proof-of-stake (PoS) network, meaning vast computing power was no longer needed to validate transactions or mint new units of Ethereum’s ETH token.
Estimations suggested it would reduce Ethereum’s electricity consumption by more than 99 per cent, which has now been confirmed by a study released in the data-science journal Patterns on Tuesday.
”In absolute terms, the reduction in power demand could be equivalent to the electrical power requirement of a country such as Ireland or even Austria,” the study noted.
The reduction in power demand for Ethereum’s network may not reverberate globally, however, as the computing devices used to mine ETH could still be repurposed to mine other cryptocurrencies still using PoW – so long as demand for these cryptocurrencies remains high.
“If crypto consumers were sufficiently concerned, they would probably avoid buying bitcoin and, previously, Ethereum,” said study author and crypto economist Alex De Vries said.
“But just last year these crypto assets were still hitting all-time highs, even though there is no shortage of news coverage on their climate impacts.”
Bitcoin advocates have so far been reluctant to impose a similar change for the world’s leading cryptocurrency, as they claim it moves away from its core principle of decentralisation.
This could potentially change if there is significant pressure from regulators, with the White House Office of Science and Technology Policy releasing a report in September recommending a shift towards environmentally responsible cryptocurrency technologies.
“This is being discussed at the highest levels of government. Regulation would be helpful in getting the community to reconsider its current stance,” Mr De Vries said.
“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 to actually make these things happen.”