Ethereum co-founder Vitalik Buterin named a way to solve the environmental problems of Bitcoin during a speech at the StartmeupHK virtual festival in Hong Kong. According to the developer, the main cryptocurrency, like Ethereum, needs to go to the Proof-of-Stake (PoS) consensus.
The transition of Ethereum to PoS will reduce the carbon footprint that appears as a result of mining, Buterin said. As previously reported, this should happen before the end of the year.
Ethereum’s transition to the Proof-of-Stake consensus will take place when the blockchain is updated to version 2.0. The essence of PoS is that the operation of the network provided by the owners of digital coins, not miners. So, the algorithm does not require large computing power. The token holders receive a reward for maintaining the network. This process is called staking.
Buterin: “Bitcoin may lose first place to Ethereum”
“Proof-of-Stake is a solution to the environmental problems of Bitcoin. Which requires much less resources to maintain”, added the co-founder of Ethereum.
Bitcoin is now working on a Proof-of-Work (PoW) consensus. This algorithm is used to confirm transactions and create new blocks. With the help of PoW, miners compete with each other to confirm transactions on the network, receiving a reward for this.
Proof-of-work existed for several decades and used by the largest cryptocurrencies. Recently, however, this has resulted in unprecedented electricity consumption.
Buterin has already said that Bitcoin may give way to Ethereum. In his opinion, the main cryptocurrency needs to improve the technological base to improve energy efficiency.
“We will move from energy consumption at the level of a medium-sized country to energy consumption at the level of one village”, he explained. If Bitcoin doesn’t make a similar transition, “there is a great risk that it will be left behind”.
Thanks to PoS, energy consumption and the amount of equipment for Ethereum mining can be reduced by 100 or even 10 thousand times, Buterin added.
The Ethereum Foundation wrote on their blog that if the transition to Proof-of-Stake is successful, it could reduce Ethereum’s energy consumption by up to 99.95%.
However, the developers acknowledge that Proof-of-Stake:
“Still in its infancy and less battle-tested than Proof-of-Work, despite its advantages in energy efficiency and equipment efficiency. We thought we could do it in one year. But now it took us about six years to build the model, and the work is not over yet”.
Low energy efficiency and environmental friendliness
The researchers estimate that 45.8 TW of electricity spent annually to maintain the bitcoin blockchain network. When recalculated for the carbon footprint, it appears that from 22 to 22.9 Mt of carbon dioxide was emitted into the atmosphere.
Some cities (like Hamburg and Las Vegas) or even smaller countries like Sri Lanka or Jordan produce comparable amounts of CO2.
For its low energy efficiency and environmental friendliness, Bitcoin criticized by Tesla’s CEO Elon Musk. For the same reason, his company temporarily refused to sell electric vehicles for cryptocurrency. Musk also called the insane level of electricity consumption by Bitcoin.
Ultimately, Buterin seems to agree with critics about the need for blockchains to adopt newer and more efficient models. Especially as the chain grows in volume and becomes a widely used computing network.