Overall global energy savings may be curbed if computers previously used to secure the Ethereum blockchain are repurposed to mine other cryptocurrencies.
(Bloomberg) — This year’s revamp of the Ethereum blockchain to curb its power use by an estimated 99% was hailed as a seminal step toward making the cryptocurrency sector greener but a new analysis indicates the reality is a little more complicated.
Overall power savings and climate gains are likely to be curbed if the electricity-hungry computers that previously helped to operate the network have been repurposed to mine other energy-intensive tokens, according to a paper published Tuesday in Cell Press journal Patterns by Alex De Vries, who runs the research platform Digiconomist.
Most of the processing power “used to mine Ethereum could be used on an even broader range of cryptoassets,” De Vries said in the paper. They could also be “repurposed for other energy-intensive operations involving cloud computing, artificial intelligence, or simply for gaming a few hours per day.”
The Ethereum Foundation didn’t immediately reply to a request for comment.
The vast amount of electricity consumed by crypto remains a bone of contention given that skyrocketing power costs are denuding household budgets from China to Europe. The White House said in September the environmental impact of producing cryptocurrencies like Bitcoin could impede US efforts to combat climate change, while the European Central Bank has signaled it may tighten oversight.
Digital assets are also reeling from a prolonged rout and a string of blowups at crypto outfits, particularly Sam Bankman-Fried’s collapsed FTX exchange. A gauge of the largest 100 tokens has slumped more than 60% in the past year, far oustripping the decline in global stocks.
Ethereum’s transition in September to a proof-of-stake from a proof-of-work approach — a shift called the Merge — could have slashed its power demand by as much as the electricity requirement of Austria, according to the analysis from De Vries. He also emphasized that determining the exact power consumption of digital currencies is challenging because not all miners operate at the same efficiency.
Some large-scale miners of Ethereum’s native token Ether, such as HIVE Blockchain Technologies Ltd. and Hut 8 Mining Corp., said they planned to use their facilities for other purposes, such as high-performance computing, after the Merge.
Bitcoin, which has the biggest climate impact of all tokens, consumes 114.1 terawatts of energy on an annualized basis, according to Digiconomist, which is comparable to the power consumption of the Netherlands. That amount of electricity generates more than 63 million tons of carbon dioxide, which is on par with the carbon footprint of Serbia and Montenegro.
Ethereum’s transition to a network with reduced energy needs — even if the ensuing climate gains fall short of some expectations — offers a roadmap for other cryptocurrencies to decarbonize, according to De Vries.
Crucially, Ethereum’s shift shows it’s possible to make the necessary changes to a live blockchain. The relative impact of moving Bitcoin away from the power-hungry proof-of-work approach could be greater because of the widespread use of Bitcoin-specific devices that can’t be repurposed, De Vries added.
The Ethereum network is the most important blockchain commercially, facilitating an array of financial applications. Whether Bitcoin will ever follow in its footsteps by ditching proof-of-work, for instance at the behest of regulators, remains a hotly debated topic.
–With assistance from Joanna Ossinger.
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