The second-largest cryptocurrency pulled off a major update to the way that it creates tokens, setting a new precedent for the industry and radically reducing its energy consumption.
On Thursday, ethereum carried out what is being called the “Merge,” a highly anticipated change to the way the currency validates tokens within its system.
“Happy merge all,” tweeted ethereum founder Vitalik Buterin. “This is a big moment for the Ethereum ecosystem. Everyone who helped make the merge happen should feel very proud today.”
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With the Merge, ethereum’s method for producing the tokens tracked on its blockchain ledger, known as Ether, has transitioned from “proof of work” to “proof of stake.”
The “proof of work” method had users “mine” the currency by having computers process a series of algorithms in competition with other computers to earn Ether. While most cryptocurrencies use this method, it consumes an enormous amount of energy and has been the subject of scrutiny by New York regulators.
The Merge had ethereum swap to “proof of stake,” a method of token creation in which users install “validators,” software that helps process transactions of ethereum and that requires them to hold a minimum of 32 ETH, or about $53,000, in order to be approved. The validators are then chosen randomly by an algorithm to “mine” coins and validate a related block of transactions.
The update will have an enormous impact on cryptocurrency’s environmental impact, according to industry experts. The transition will allegedly cut the electricity consumption and carbon footprint of the ethereum network by over 99.988 % and 99.992%, according to a report from the Crypto Carbon Ratings Institute.
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The ethereum merge has been promoted for several years. Buterin wrote about “proof of stake” in a 2014 blog post before the currency came into existence and had been making efforts to pursue the “Merge” for at least two years. These efforts included partnering with the tech company Consensys to make the “Beacon” chain, a separate ethereum blockchain that operated on “proof of stake” since 2020.
