The host of the well-liked crypto market analysis programme Coin Bureau earlier this week talked about the advantages and disadvantages of Ethereum's just-completed Merge upgrade.
As you are probably aware, Ethereum completed its Merge upgrade on September 15 and switched from proof-of-work (PoW) to proof-of-stake (PoS).
Here is what the Ethereum Foundation said regarding the change in Ethereum's energy consumption prior to the Merge:
"After The Merge from proof-of-work (PoW) to proof-of-stake, Ethereum's energy consumption will drop by around 99.95%." (PoS). In order to be more secure after The Merge, Ethereum will utilise significantly less carbon.
"Ethereum has sought to adopt a proof-of-stake consensus mechanism since its conception, but doing so without jeopardising Ethereum's goal of being a safe, scalable, and decentralised blockchain has required years of intensive research and development.
"As a result, the network's initial consensus method was proof work. In order to reach a consensus, proof-of-work miners must employ their computing resources to crack a code. The answer to the riddle demonstrates the miner's energy expenditure, proving they spent money to earn the privilege to add to the blockchain.
Proof-of-stake and proof-of-work are merely mechanisms for determining who gets to add the next block, respectively. The requirement for miners to consume energy to add to the blockchain is eliminated by switching from proof-of-work to proof-of-stake, where the real-world value invested comes from ETH staked directly in a smart contract. Consequently, there is a significant reduction in the environmental cost of network security.
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