Last night the Ethereum blockchain severed its links to crypto mining.
Codenamed ‘Shanghai’, the hard fork capped off ‘The Merge’ – Ethereum’s move from proof-of-work to proof-of-stake, fundamentally changing the way transactions are verified and the network secured.
Rather than relying on carbon-intensive computing to validate new data blocks, as with Bitcoin, users now stake cryptocurrency as a guarantee to secure and confirm new blocks.
After Shanghai, validators can now withdraw their staked ether or redeem the rewards – leading to fears that the market would be flooded with withdrawal requests.
However Ethereum will only permit 1,350 validators to withdraw their stake each day over the next 18 months, and each of these has staked 32 ETH – so no more than 43,200 ETH can enter the market per day.
Although this shift to a proof-of-stake system removes a barrier to more mainstream adoption of crypto, Joe Baguley, vice president & CTO, EMEA at VMware, says Bitcoin’s continued reliance on proof-of-work is a huge problem.
“The debate around Bitcoin’s environmental impact is one we will be having for years to come. For naysayers to imply the environmental impact of crypto mining is negligible is a mistake,” he said.
“It is an oversight of the long-term impact proof-of-work blockchains will have on the planet, which will only rise, particularly as we’ve seen more mainstream adoption and legal tender of mining currencies such as Bitcoin from the likes of El Salvador and, more recently, St Kitts and Nevis in the Caribbean.
“The Ethereum Merge is a responsible step in the right direction, removing a fundamental environmental barrier to more mainstream adoption. But it won’t put a plaster on this carbon-intensive [overall crypto] network, particularly if Bitcoin won’t also overhaul its underlying infrastructure.”
Baguley, who sits on several advisory boards at the European Commission and ETSI, and is a founding committee member of the Data Centre Specialist Group at the British Computer Society, says Bitcoin’s “ruthless” energy consumption cannot be offset with renewable energy.
“Plugging renewable resources into powering these blockchains can’t even begin to counteract its environmental burden; we just have to consider what other legitimate uses could have been offset with that same power,” he said.
“Thankfully, not all cryptocurrencies have the same environmental impact as Bitcoin. The question now arises on what can be done with the hardware required for cryptomining.
“There are already reports of powerful GPUs being sold off. What we need to ensure is that they aren’t being repurposed to mine other cryptocurrencies, but recycled for a greener use unrelated to the proof-of-stake protocol.
“There’s no such thing as ‘green’ crypto mining. What we really need is a cryptocurrency that is green by design and to prioritise building a more sustainable blockchain ecosystem from the outset – one which is both environmentally and financially stable.”
The next major Ethereum update, ‘Cancun’, will focus on scalability by reducing gas fees and improving transaction times.