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Ethereum, the second largest cryptocurrency, has completed a plan to reduce its carbon emissions by more than 99%.

The software upgrade, known as the merge, will change how transactions are managed on the ethereum blockchain, a public and decentralised ledger that underpins the cryptocurrency and generates ether tokens, the worlds most popular cryptocurrency after bitcoin.

Vitalik Buterin, ethereums inventor, announced the completion of the plan on Twitter on Thursday morning, tweeting Happy merge all.

The move means that ethereum will no longer be created by an energy intensive process known as mining, where banks of computers generate random numbers that validate transactions on the blockchain and generate new ether tokens as part of the process. The process, known as proof of work in the cryptocurrency world, will now move to a proof of stake system, where individuals and companies act as validators, pledging or staking their own ether as a form of guarantee, to win newly created tokens.

Ethereum mining used up as much electricity as Austria, according to the Digiconomist website, at 72 terawatt-hours a year. Alex de Vries, the economist behind the website, estimates that the merge will reduce the carbon emissions linked to ethereum by more than 99%.

De Vries added that the move could represent 0.2% of the worlds electricity consumption disappearing overnight. However, he said bitcoin remained the biggest single contributor to the crypto worlds carbon footprint.

All eyes will be on bitcoin. It remains the largest polluter in the crypto space. Even today bitcoin is responsible for as much electricity consumption as Sweden. And we know thats not going to change, said De Vries.

Ethereum rose 2% to $1,630 (1,417) after the move, according to website coinmarketcap, valuing the currency at just under $200bn. Bitcoins market cap is worth $387bn, having fallen sharply from its peak of more than $1tn last year.

Carol Alexander, professor of finance at University of Sussex Business School, said the merge was a significant event for the crypto industry

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The merge is the most important event in blockchain history, she said. In my opinion, today marks the beginning of the end of bitcoins dominance over crypto assets. Ethereum is achieving something that bitcoin never could because bitcoin is a purely speculative asset and its mining network would never agree to drop that source of income.

Alexander added that the ethereum blockchain is a key feature of the web3 world - a catch-all term for the latest iteration of the internet - including its role as a base for non-fungible tokens. It powers the smart contract transactions on Ethereum that underpin web3 and therefore the digital economy today.

Link:
Ethereum cryptocurrency completes move to cut CO2 output by 99% - The Guardian