Vitalik Buterin, inventor of Ethereum, plans to decrease 99 percent of energy consumption used in mining ethereum– but is it possible?
Problem in Crypto Mining
Over the years, since crypto mining was introduced, the problem of its massive electricity consumption made businesses invest millions of money.
Although this sounds riskful for some people, the number of companies and businessmen, trying to start their mining empires still continues to increase over the years.
“That’s just a huge waste of resources, even if you don’t believe that pollution and carbon dioxide are an issue. There are real consumers—real people—whose need for electricity is being displaced by this stuff [mining],” says Buterin.
Ethereum Plans A Major Change
Ethereum, now as the world’s largest cryptocurrency, also uses huge amount of electricity in mining– equivalent to energy consumption in Iceland. Due to this, Buterin shared the same sentiment with the miners regarding mining that later on, forces him to take an action.
Now, the founder of Ethereum, promised to lessen this problem as the company switches its computational competition from blockchain-based proof-of-work (PoW) to blockchain based proof-of-stake (PoS) algorithm.
“… Latest ETH update should complete transactions using just 1% of the energy consumed today by replacing PoW with PoS.”
Proof-of-work vs Proof-of-stake
As explained in Spectrum, PoW is normally used in most cryptocurrency mining. PoW or proof-of-work is difficulty designed for ‘all participants to race to cryptographically secure transactions and add them to the blockchain’s globally distributed ledger.’
In layman’s term, PoW requires a lot of energy consumption since its computational power shouts competition over other cryptographs. So in order to gain profit, miners must provide huge electricity.
On the other hand, PoS or proof-of-stake were basically much cheaper way of mining cryptos. As also explained, ‘Instead of millions of processors simultaneously processing the same transactions, PoS randomly picks one to do the job.’
Another factor on PoS’ perks in mining is that PoS were proven to be more efficient and safer than PoW. As a matter of fact, according to the report, Ethereum already worked for this project since 2015– after a lot of tests done using PoS.
Is it Possible?
This year, the company is now accurate to change its computational competition, but some experts seemed to gain disbelief in Buterin’s claims.
“I’m not exactly sure about the wisdom of a staged transition. You either have faith and confidence in your consensus algorithm or you don’t,” said Charles Hoskinson, CEO for blockchain tech firm IOHK.
Ethereum’s future plan of switching from PoW to PoS can be a tragic change or a successful path for the company. Still, crypto miners are celebrating for this major change to come.