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Popular cryptocurrency blockchain Ethereum has completed its long-awaited switch to proof-of-stake. That upgrade process, better known as “The Merge”, has been years in the making. According to the Ethereum Foundation, today’s transition reduces Ethereum’s energy consumption by 99.95%.
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Now, Ethereum uses a new mechanism called proof of stake that gets rid of puzzles and mining. Instead, validators need to stake some of their tokens for a chance to validate new blocks of transactions and be rewarded with tokens in return. The successful launch of The Merge places greater pressure on other cryptocurrencies still using proof of work.
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The price of ether fell on Thursday after the migration. Ether was last down 5.6% to $1,501.88, after falling as low as $1,459.00 earlier in the day. Despite this, investors have been cheering Ethereum’s planned tech upgrade for months for its ability to turn ether into a yield-generating asset and to improve the security of the network in an energy-efficient way.
16 Sep 2022
Ethereum’s biggest-ever upgrade
It completes its merge to a proof-of-stake network
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Why it matters
The Ethereum blockchain has existed since July 2015, and planning for the merge has been in the works for several years. Before the merge, Ethereum's annualized power consumption was comparable to the country of Chile's, and its carbon footprint was similar to Hong Kong's, according to Digiconomist's Ethereum Energy Consumption Index. Also, mining Ethereum has long required powerful banks of computers to solve difficult math problems, this made it difficult to scale and costly for small transactions - which goes against the cryptos ethos and values.