The overhaul cut Ethereum’s energy use by 99.988% and carbon-dioxide emissions by 99.992%. The decrease means the network now spews out less carbon dioxide (CO2) than a few hundred U.S. households do during a full year of electricity use, according to a new report from the Crypto Carbon Ratings Institute (CCRI).
CoinDesk Special Coverage: The Ethereum Merge
"We're delighted to have commissioned this report from CCRI, which substaniates the Ethereum Merge's impact as likely the biggest decarbonization effort of any industry in history," ConsenSys founder Jospeh Lubin, who also co-founded Ethereum, said in a statement.
The long-awaited Merge muscled out crypto miners from running Ethereum, doing away with a system called proof-of-work (PoW) in favor of a proof-of-stake (PoS) mechanism, which doesn't require vast server farms running complex computations and thus consumes a lot of electricity. The amount of energy guzzled by PoW, which is how Bitcoin and other blockchains still operate, has come under extreme scrutiny from lawmakers and policymakers around the world.
Before its transition to PoS, a single Ethereum transaction used 200.05 kilowatt hours (kWh) of electricity, comparable to how much the average U.S. household uses in 6.7 days, according to one estimate.
Bitcoin still uses PoW, drawing criticism from environmentalists and policymakers. However, some bitcoin advocates have argued that bitcoin mining uses a larger mix of renewable energy than other industries and can actually help the world transition to cleaner energy.
The Merge not only could help the environment, it could also lure more money to Ethereum from ESG investors – those who only invest in companies and industries that achieve certain environmental, social and corporate-governance goals. Investors barred from buying tokens that run on PoW systems may be able to buy ETH, Ethereum’s native token, after the PoS switch, Bank of America said in a report this week.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.