Cryptocurrencies have brought a lot of innovation to the world, as they offer something decentralized, which wasn’t present before Bitcoin came into the landscape. But they also come with a big disadvantage: a vast energy consumption.
Bitcoin is a cryptocurrency that shows that cryptocurrencies can bring huge electricity bills. Bitcoin uses a Proof-of-Work (PoW) consensus mechanism, where users validate transactions and add new blocks through a process called mining.
In this procedure, miners need to solve complex mathematical problems, and the one who finishes first receives rewards in the form of newly mined BTC. However, people have started to be concerned by the enormous electrical consumption of mining, which has made developers try to come up with solutions to the problem.
Ethereum, on the other hand, is a digital coin that proves that cryptocurrencies can be greener. Ethereum is the second largest cryptocurrency, which has skyrocketed in value in the past few years, as seen on the ETH price chart. But how did Ethereum manage to be a greener option than its cousin, Bitcoin? Let’s discover together.
How Did Ethereum Become Greener?
Ethereum was launched in 2013 by a group of developers, including Vitalik Buterin, to improve the shortcomings of Bitcoin and become something more than just a store of value. It managed to do that, as Ethereum brought a lot of innovations into the game, forever revolutionizing the crypto landscape. When Ethereum was launched on the market, it functioned exactly like Bitcoin, with a PoW consensus mechanism. However, because the developers considered the concerns of users, Ethereum took the necessary steps to embrace a greener alternative and lead the way towards changing to a Proof-of-Stake (PoS) consensus mechanism.
What Were the Drawbacks of PoW?
PoW was the consensus mechanism that Bitcoin first used and then it was also adopted by Ethereum. PoW has advantages because it creates a transparent and fair environment that rewards miners who manage to solve complex puzzles first. This consensus mechanism offers high security for Ethereum, reducing the chances that something bad happens or hackers manipulate the blockchain. However, even if the PoW had some advantages, it also had drawbacks.
One of the most noticeable drawbacks is the high energy consumption of this operation, where miners need to use powerful computers all day to solve the complex problems of Ethereum. Because of this, Ethereum used a large amount of electricity, with an annual energy consumption of 50.63 terawatt-hours (TWh), comparable to Bangladesh and Singapore’s usage.
The mining process of PoW also had bad environmental implications, and because it consumed a large amount of energy, it contributed to climate change and generated more greenhouse gas emissions. Other than this, PoW also brought scalability issues and limited the speed and throughput of Ethereum, which was an important issue for this blockchain, as it needed to have enough space to create DeFi services, dApps, and NFTs.
In mining, people also have to consider hardware requirements and specialized models, such as ASICs and GPUs, so that miners can mine profitably and efficiently. However, because this hardware can come with high costs, it reduced Ethereum’s inclusiveness and accessibility, which wasn’t something developers wanted.
What are the Advantages of PoS?
PoS is very different from PoW, as validators only need to stake their ETH in this process to validate transactions and generate new blocks. On the other hand, in PoS, people only need to lock up an amount of ETH, and then the blockchain’s algorithms randomly choose the validators.
The PoS doesn’t consume the same energy as PoW because users don’t need to compete for block rewards and be the first ones to solve a puzzle. This is why, with this new switch, Ethereum can become more sustainable and energy-friendly. Plus, this consensus is more accessible because it doesn’t use intensive computing hardware, and thanks to this, anyone can participate in the staking process of Ethereum. The PoW also limited the throughput of Ethereum, but things changed when Ethereum switched to PoS, which reduced a lot of the complicated mining process and helped the program have a higher speed and throughput. Plus, with even more developments, Ethereum can manage a greater amount of transactions simultaneously, which greatly increases the capacity of the blockchain.
Is the PoS Model More Profitable for Ethereum?
With the help of the PoS consensus mechanism, Ethereum has increased its profitability by becoming more efficient and sustainable. This option is also advantageous for validators, who can receive rewards by only staking an amount of ETH, and we know that things weren’t that easy with PoW.
Because Ethereum had managed to solve some of the pressing issues that the crypto space brought to the world, it increased its popularity and made more people consider this digital coin. So, overall, switching to a PoS consensus mechanism has proved very profitable for Ethereum.
Can Ethereum Become Even Greener in the Future?
Ethereum developers are constantly helping Ethereum become greener and reduce crypto’s impact on the world. This is why Ethereum will continue going through numerous developments to make the blockchain more sustainable, scalable, efficient, and eco-friendly. Ethereum made a good decision when it changed to a PoS model. In this way, the blockchain received the title of one of the world’s most sustainable and energy-efficient platforms. Plus, because Ethereum no longer needs to mine to validate new blocks, this has made it more accessible and inclusive, and now anyone can become a validator.
Ethereum is a powerful blockchain that has brought many advantages to the world, and because of that, it has grown a lot in the last few years. As the future will surely bring new advances and innovations, we can just wait and see what Ethereum will look like in the future.
By Amey MyersAmey, an intrepid traveler and avid blogger, roams the world, absorbing diverse cultures, flavors, and experiences. Her writing captures the essence of her adventures, inspiring others to explore. Amey's infectious passion for travel and storytelling epitomizes a life filled with exploration and adventure.
