After years of anticipation, cryptocurrency ethereum finally made a major network upgrade that completely changes the way blockchain verifies transactions, mines new coins, and secures its network. Called proof of stake, this system has reduced ethereum’s energy consumption by more than 99%.
Energy use is one of the crypto industry’s biggest criticisms. But it’s not possible bitcoin will follow.
Instead, the bitcoin network is sticking to a system known as proof of work, in which highly specialized computers try to guess a winning number to validate transactions and generate new coins. This is what is called mining.
Currently, guessing the winning number requires more than a hundred billion attempts. All this work helps secure the network by making it nearly impossible for bad actors to accumulate enough computing power to take control. But recent research also shows that in 2020, Bitcoin mining consumes 75.4 terawatt-hours of electricity, more than all of Austria or Portugal.
This is the system formerly used by ethereum. But now the network has swapped miners for validators. Instead of playing a massive computational guessing game, assigned validators verify new transactions and earn ether as a reward for doing so.
To ensure that these validators act honestly, they basically have to stake security by placing a certain amount of ether coins on the network. If validators try to hack the network, they lose their deposit. Ethereum advocates say that this penalty will make the network more secure, while bitcoin enthusiasts see proof of work as a more secure, tried-and-true approach.
However, the optics of bitcoin’s energy use in the midst of the global climate crisis has become an issue for the network. In response, several major bitcoin miners are starting to look to renewable energy to power their data centers and are trying to change the story by touting their energy usage. bitcoin as an asset, as it helps spur investment in the nation’s aging power grid.
Watch the video to learn more about how crypto is trying to go green
