As the debate for cryptocurrency’s energy use catches fire, Ethereum’s transition to the Proof-of-stake (PoS) consensus model is likely to reduce its carbon footprint to a great extent.
On Thursday, May 27, Ethereum co-founder Vitalik Buterin spoke on the ongoing debate of carbon emission contributions through crypto mining. The debate has caught fire once again with Tesla recently pulling out of Bitcoin payments. The Bitcoin and Ethereum blockchain both use the Proof-of-Work (PoW) that requires high mining power. However, the Ethereum network is now in the process of shifting to an alternate ‘Proof-of-Stake (PoS)’ model. Buterin is pretty much confident that the PoS model will reduce Ethereum’s carbon footprint contribution significantly.
Speaking at the StartmeupHK virtual festival in Hong Kong, Buterin said:
“Proof-of-stake is a solution to the [environmental issues] of Bitcoin—which needs far less resources to maintain”. With the PoS model, Buterin believes that Ethereum’s energy consumption and hardware needs could be reduced by a factor of 100, or even 10,000.
The Ethereum co-founder is expecting the transition to PoS to happen by the year-end. In its blog post, the Ethereum Foundation wrote that the switch to PoS can reduce Ethereum’s energy consumption by 99.5%.
Giving a comparison between the PoS and the PoW models, the Ethereum Foundation wrote the following. The Ethereum PoS theoretically “consumes something on the order of 2.62 megawatts. This is not on the scale of countries… but that of a small town (around 2,100 American homes). For reference, POW consensus on Ethereum currently consumes the energy equivalent of a medium-sized country.”
However, the Etheruem Foundation acknowledged that the PoS is still in the infancy stage and less battle-tested in comparison to PoW.
Ethereum PoS Model by End of 2021?
During his recent interview, Vitalik Buterin said that he expects the PoS changes to arrive by the end of 2021. However, many experts think that this could land during the first half of 2022. The Ethereum founder noted:
“Switching to proof of stake has become more urgent for us because of how crypto and Ethereum have grown over the last year. I’m definitely very happy that one of the biggest problems of blockchain will go away when proof of stake is complete. It’s amazing.”
Millennial investors who have been present in the crypto space are pushing for positive environmental, social and governance, or ESG, standards. However, many analysts still expect Ethereum’s native crypto Ether to gain market share.
“Ethereum has a massive ecosystem of decentralized finance use cases with rapidly growing adoption. Combine these two dynamics and we think Ethereum will keep gaining market share relative to Bitcoin,” Dan Morehead, founder of Pantera Capital told investors.
Other crypto news can be found here.
Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.