Can Ethereum’s proof-of-stake transition save the planet?

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Ethereum’s transition to proof-of-stake (PoS) promises to dramatically lower energy consumption, curbing greenhouse gas emissions that would require an annual offset by a forest roughly the size of Belgium. 

Ethereum is migrating away from proof-of-work (PoW), the consensus mechanism that powers Bitcoin transactions, with an upgrade known as “The Merge.”

The PoS consensus mechanism, in which token holders validate block transactions based on the number of staked assets, will reduce energy consumption by 99.95%, according to the Ethereum Foundation.

This will cut Ethereum’s carbon emission to 0.07 kilograms per transaction from the current 147.86 kilograms, making its carbon footprint over 17,000 times more efficient than Bitcoin, the foundation claimed. 

It would also bring down the number of trees required to offset the carbon emission to just over 1,200 from more than 2.55 million trees required to offset a million transactions on Ethereum.

“The carbon footprint of blockchains has already become a regular discussion point among developers, regulators and politicians,” Rahul Gaitonde, a crypto analyst and advisor to blockchain companies, told Forkast.

New York State lawmakers are considering a law that would ban PoW crypto mining for a period of two years.

The general idea of the bill is to block mining operations powered by “electric generating facilities that utilize a carbon-based fuel,” in line with the state’s Climate Leadership and Community Protection Act, which has set a target of cutting greenhouse gas emissions by 85% by 2050. 

Gaitonde said the debate continues on the carbon footprint of blockchains and whether mandates that require the use of renewable energy can be used to solve the problem. 

About 40% to 70% of Bitcoin mining used renewable energy sources, The New York Times reported in September 2021.

With Chinese Bitcoin miners migrating from the Middle Kingdom en masse, researchers found that Bitcoin mining has become more harmful to the environment at a global level, possibly from these miners setting up bases abroad. 

In 2021, each Ethereum transaction produced 103.42 kilograms of carbon dioxide. With more than 460 million transactions on the network in 2021, the carbon emissions for the year amounted to 47 million tonnes.

These emissions would require 20 years and 823 million trees to offset their carbon footprint, according to a model by agroforestry non-profit Trees for the Future. Looked at in another way, that is equivalent to what a forest of 26,645 square kilometers would absorb on an annual basis, a surface area roughly equal to that of Belgium.

Ethereum’s move to PoS, in which the public Ethereum Mainnet will merge with the Beacon Chain, is expected to be completed by the end of June.

Aside from lowering the carbon footprint, the main benefit is to make Ethereum more scalable and secure.

The update is expected to increase the number of transactions Ethereum can handle from the current 15 to 20 transactions per second, lower gas fees, and boost the network’s security. 

The move to PoS will not be enough for Ethereum to claim the crown of being the most sustainable blockchain. Ronin, an Ethereum-linked sidechain claims to only produce 0.000001 kilograms of carbon dioxide per transaction while Solana, which uses a hybrid of PoS and proof-of-history (PoH) consensus mechanism, produces around 0.0002 kilograms

Bitcoin, the largest cryptocurrency by market capitalization, has the worst carbon footprint at 1,223.38 kilograms of carbon dioxide per transaction. At that rate, 1.2 million tonnes of carbon dioxide are produced for every million Bitcoin transactions, equivalent to what 21 million trees would absorb over 20 years. 

Although the transition doesn’t make Ethereum the most sustainable blockchain technology, it is a step in the right direction, according to experts.

“Sustainability is a major hurdle stopping many institutions from investing in crypto, so a decrease in environmental impact should assure many investors,” Marcus Sotiriou, analyst at GlobalBlock, told Forkast.

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