Cryptocurrency giant unveils dramatic shift in traditional computing tech — here's why it matters

Cryptocurrency network Ethereum achieved a dramatic reduction in energy consumption two years after altering its validation system, showcasing a path toward greener digital currencies.

As detailed by CCN, Ethereum has become one of the most eco-friendly blockchains after launching a transformation known as "The Merge" in September 2022.

As part of the transition, the platform, whose native currency is known as ether or ETH when trading, moved from a "proof-of-work" (PoW) consensus mechanism to a "proof-of-stake" (PoS) system, reducing energy consumption by an astounding 99.95%.

While both mechanisms validate electronic transactions, the former can require as much energy as small countries, since miners are basically exchanging energy for cryptocurrency, as Investopedia explains .

Because of this energy usage, PoW systems aren't just responsible for significant amounts of harmful pollution if they rely on power plants using dirty fuels — the burning of which accounts for most of the heat-trapping gases overheating Earth.

They also contribute to electrical grid crashes and can be dangerously loud. In the Texas town of Granbury, for example, residents have reported irreversible hearing loss, tinnitus, and reduced quality of life due to a Bitcoin mine. Environmental law group Earthjustice filed a lawsuit against operator Marathon Digital Holdings on the Granbury residents' behalf.

Watch now: How the NBA is making layups in the sustainability game On the other hand, PoS validates through the staking of tokens rather than computational puzzle solving, lowering energy usage because miners can't gain an advantage by depending on the power of single-purpose hardware, per Investopedia .

"[The Merge] is hopefully a step into a more sustainable future for cryptocurrencies," Crypto Carbon Ratings Institute co-founder and CEO Uli Gallersdörfer told The Verge in 2022. The research company estimated the transition would cut Ethereum's carbon pollution from 11 million tons annually to 870 tons.

According to CCN , The Merge has also been good for Ethereum's bottom line, increasing its institutional adoption and doubling its market capitalization to approximately $600 billion. Other post-Merge updates have also boosted transaction speeds.