EXPLAINER: Ethereum is ditching its ‘miners.’ Why?

SAN FRANCISCO (AP) – A complex software change to the cryptocurrency Ethereum has the potential to drastically reduce its energy consumption – and the resulting climate-related pollution. But the transition known as “merge” is not enough.

With the change taking effect late Wednesday, Ethereum — the world’s second most valuable cryptocurrency after Bitcoin — has effectively eliminated the energy-intensive task of “mining” new coins on its blockchain. Mining requires enormous computing power, which results in enormous energy consumption and in many areas higher greenhouse gas emissions from older power plants.

However, the Ethereum change alone will not eliminate the expected environmental impact of crypto, although it is expected to help greatly. Bitcoin backers have so far shown little interest in abolishing mining.


Cryptocurrency is a type of digital money that is publicly viewable through encryption and supposedly immutably secured. With these currencies, people can conduct direct financial transactions without the need for a bank or other financial intermediaries.

They run on constructs called blockchains, which consist of digitally signed transaction records documenting each transfer or issuance of a crypto coin. Blockchains are also known as distributed ledgers because synchronized copies are stored on computers around the world; These copies also make it extremely difficult to alter, insert, or destroy blockchain records.

Is crypto bad for the environment?

Researchers who have studied cryptocurrencies are alarmed by their huge energy consumption. A recent report from the White House Office of Science and Technology Policy cited research showing that the annual electricity consumption for cryptocurrencies exceeded that of individual nations like Argentina or Australia in August 2022.

However, this problem is not inherent to cryptocurrency. Most of that energy is used for mining, a computationally intensive process of verifying blockchain transactions that also distributes new coins as rewards for competing miners. Crypto mining prefers well-resourced groups that can assemble many specialized computers and power them as cheaply as possible.

This can have unexpected external effects. Before cryptocurrency values ​​collapsed earlier this year, demand for computer graphics cards skyrocketed, sending prices skyrocketing and emptying shelves – much to the chagrin of gamers. Such cards turned out to be ideal for crypto mining rigs. Cities and states across the US have also resisted plans by crypto firms to build mining sites in their jurisdictions, citing not only power consumption but noise as well.


First and foremost, the software update makes miners obsolete. Where Ethereum previously pitted miners against each other to solve complex cryptographic puzzles and win new coins as rewards, now parties wanting to help validate transactions must put some skin into play by using a certain amount of Ether, the Ethereum -Coin, staking. .

Parties from this pool are randomly selected to validate a block of transactions; A wider group of ether holders will then review their work. Successful validators receive a reward in Ether, which is generally proportional to the size of their bet and the length of time they have held it.


The Ethereum merger doesn’t sound like much, but it could have dramatic implications. Alex de Vries, economist and founder of the consultancy Digiconomist, which focuses on the environmental impact of cryptocurrencies, calculates that the switch will result in energy savings of between 99% and 99.99% for Ethereum. (De Vries emphasizes that his work has not yet been peer-reviewed.)

“It’s a really small change to the code that will have a very big impact on environmental sustainability,” he said. Before the merger, Ethereum performed up to 900 billion calculations per second, which is no longer needed.

According to his calculations, Ethereum was responsible for about 44 million tons of carbon dioxide emissions per year. If he’s right, these are now drastically reduced.

On the other hand, Bitcoin’s energy consumption and greenhouse gas emissions are significantly larger than Ethereum’s – and there doesn’t seem to be much enthusiasm for moving away from Bitcoin mining.

The Ethereum merger was long-planned and required years of preparation by its development teams, said Lena Klaassen, co-founder of the Crypto Carbon Ratings Institute, a German company specializing in measuring the environmental impact of crypto. “Such ambitions have never existed for bitcoin and as such I don’t expect bitcoin to move away from mining any time soon,” she said.


AP reporter Frank Jordans in Berlin contributed to this article.

Copyright 2022 The Associated Press. All rights reserved. This material may not be published, broadcast, transcribed or redistributed without permission.