Ethereum Merge Goes Live: What this Means for Its Network Consumption

Updated:

The Ethereum blockchain has successfully pulled through its most ambitious software upgrade in its history, the Merge, which would see the network record a dramatic decline in energy usage, according to CEO Vitalik Buterin.

The Ethereum Foundation revealed that the new validation system will consume 99.95% less energy than its previous Proof-of-Work mechanism. The upgrade also revamps how transactions take place on the network and how new Ether tokens are minted, which could give Ethereum leverage in its bid to surpass rival blockchain Bitcoin.

Commenting on the event, Richard Usher, head of over-the-counter trading at BCB Group, noted: “We believe this is a significant moment that will lead to ETH outperforming the broader crypto market for some time.”

Most blockchains consume significant amounts of energy in their mining operations and have come under criticism by environmentalists and some investors. According to Digiconomist, a single Ethereum transaction pre-Merge consumed the same amount of power an average American household used in a week.

The upgrade means the ETH blockchain switches from the energy-hungry PoW consensus mechanism to a greener Proof-of-Stake system, where individuals and companies act as validators and stake their ETH as collateral to earn newly minted tokens.

Ethereum CEO Tweets About Energy-Consumption Reduction Following the Merge

In the run-up to and after the Merge, Ethereum co-founder Vitalik Buterin has posted a barrage of tweets. Following the successful Merge between the Ethereum mainnet and the Beacon Chain, Buterin wished his 4.3 million Twitter followers a “Happy Merge”, adding, “This is a big moment for the Ethereum ecosystem.”

Buterin also tweeted a quote from Ethereum researcher Drake Justin, who claims that “the Merge will reduce worldwide electricity consumption by 0.2%.”

According to Marc Arjoon, Ethereum research analyst at CoinShares, the improvement of Ethereum’s environmental, social and corporate governance (ESG) credentials “would be good for regulatory-driven institutions that want to start to explore the Ethereum ecosystem.”

 

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Azeez Mustapha

Azeez Mustapha is a trading professional, currency analyst, signals strategist, and funds manager with over ten years of experience within the financial field. As a blogger and finance author, he helps investors understand complex financial concepts, improve their investing skills, and learn how to manage their money.