Ethereum’s energy switch saves as much electricity as entire Ireland uses

The decrease in energy use might be enough to meet Austria's or Ireland's national electrical needs.

The success of The Merge may now serve as a roadmap to enable a switch from Proof of Work to Proof of Stake in Bitcoin and other crypto assets still utilizing Proof of Work, as per the study. 

However, it would still be premature for the Ethereum community to declare a "complete victory" over the sustainability concerns facing crypto assets.

The Merge: A switch to Proof of Stake 

Blockchain was traditionally upheld and validated by a Proof of Work mechanism employed by various cryptocurrencies, including Bitcoin.

A blockchain is a massive, dynamic database that records every transaction and underpins Ethereum, just like it does with all other cryptocurrencies.

In return, companies and volunteers who contributed their computers to the network's operation received new cryptocurrency coins. The likelihood of producing new coins increased as they performed more labor.

According to the paper, this prompted companies to build enormous data centers with computers operating nonstop, frequently on energy sourced from fossil fuels.

However, on September 15, in a process known as "The Merge," Ethereum switched to a mechanism known as Proof of Stake, where the likelihood of producing a new token is no longer based on the amount of computational labor accomplished.

"The Bitcoin community has been very anti-change - but the Ethereum community has shown that despite concerns and resistance," said the paper's author Alex De Vries, a data science and economics researcher at Vrije Universiteit Amsterdam in the Netherlands. 

"It is possible to make the necessary changes on a live blockchain, which means that the Bitcoin community may need a little bit of a nudge from the outside to actually make things happen."

According to Ethereum, the technology lowers the entrance barriers for miners because they no longer require advanced processing hardware to participate and may also reduce the rewards offered for transaction verification. 

For a more thorough understanding, check this article Interesting Engineering wrote in September about Ethereum's energy switch.

Environmental concerns 

It's estimated that Bitcoin, the biggest cryptocurrency, consumes more electricity than Finland. The paper states that there have even been talks of Bitcoin emissions surpassing the worldwide savings currently achieved by using electric vehicles.

"Sustainability is an essential problem to resolve in the crypto space. To achieve this, the prospect of [the] new regulation is an important lever," Gavin Brown, an associate professor at the University of Liverpool, told BBC News.  

However, it would have been in the best interests of Bitcoin and Ethereum supporters to improve their image to draw capital from institutional investors like banks or pension funds.

"Much of that money may presently want to invest in crypto but is unable to do so until or unless crypto becomes more sustainable," said Brown.