Go Green! How green is the new Ethereum? | The Financial Express

Go Green! How green is the new Ethereum?

As per Digiconomist estimates, in the Proof of Work setup, Ethereum miners consume 44.49 TWh per year.

Go Green! How green is the new Ethereum?
Gas fees refer to the price of conducting a transaction on the blockchain network.

Ethereum’s energy consumption dropped by an estimated 99.95%, making it a green blockchain, post The Merge. This took place on September 15, 2022, to change the way the Ethereum network comes to a consensus.

As per Digiconomist, a blockchain platform, estimated that in Proof-of-Work (PoW) setup, Ethereum miners consume 44.49 terawatt hours (TWh) per year which works out to 5.13 gigawatt on a continuing basis. This means that Proof-Of-Stake (PoS) is 2000x more energy efficient based on the conservative estimates above. “Scaling solutions (such as rollups and sharding) will help further decrease the energy consumed per transaction by leveraging economies of scale,” Saurav Raaj, founder, director at Wize tokenisation, told FE Blockchain.

A recent report by the crypto carbon rating institute (CCRI) compared the energy depletion to that of a shrinking Eiffel Tower, that too a size of a Lego toy.

Source: ethereum.org

As per industry experts, the Merge will use 99.5% less energy compared to the old protocol. However, the merger does not impact or aim to reduce gas fees. Gas fees refer to the price of a transaction on the blockchain network. “As such, the Gas fee is a product of network demand relative to the capacity of the network. The Merge transitioned the Ethereum from the PoW to PoS consensus. It does not affect network capacity or throughput,” added Raaj.

However, inorder to benefit from reduced gas fees, users will be able to utilise layer2 and other scaling solutions which expands the Ethereum network capacity. By scaling user activity at layer2, layer1 Mainnet as a secure decentralised settlement layer optimised for rollup data storage to help make roll-up transactions exponentially cheaper.

Meanwhile, Swarup Gupta, financial head, Economic Intelligence Unit, stated that Ethereum will continue to operate as one single network with a change in the blockchain protocol and there will be no loss of data or transaction history. Furthermore, PoS validators will be responsible for processing the validity of all transactions and proposing blocks,” Rahul Kapoor, co-founder, CryptoRunners, stated.

The Merge’s primary goal was to reduce energy consumption by an estimated 99.95%. This upgrade makes the blockchain environmental, social, and governance (ESG) friendly. “These upgrades will come in phases and are expected to make Ethereum more accessible to the end users by offering a lower of transactions, higher throughput,” Raaj further noted.

Meanwhile, the next upgrade codenamed Shanghai is expected in approximately six months, which will add sharding as the scaling solution and will further enable layer2 blockchains. This is further expected to lower the cost of rollups or bundled transactions, besides making it easier for users to operate nodes that would secure the Ethereum network. In addition, this makes it attractive versus the Ethereum Killers such as Solana.

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