Ethereum, the technology for "sustainable" mining is ready
Possible launch as early as mid-September for the new method of validation of proof-of-stake transactions that consumes less energy. Investors return to focus on flippening, overtaking Bitcoin's market capitalization
11 Aug 2022
The dress rehearsal of the green update of the Ethereum cryptocurrency mining method has been successfully closed. The update allows a much less energy-intensive mining and is a novelty also expected by investors, because it could determine the so-called "flippening", the overcoming of Bitcoin, currently dominant, by market capitalization. The launch of the new method was scheduled for June; it then slipped and now it would be ready to go "live" already in mid-September or, in any case, by the end of the year.
The world of cryptocurrencies awaits this technological upgrade that aligns digital finance with the needs of the ecological transition. For many it may be the most important event so far in the history of cryptocurrencies.
Index of topics
• Ethereum challenges Bitcoin with green mining
• The proof-of-stake method
Ethereum challenges Bitcoin with green mining
"A successful Merge = chain finalizes," Christine Kim, a researcher at Galaxy Digital, wrote in a tweet. There are some small technical problems still to be solved but the merge and finalization have been successful and this is the most important part, the expert pointed out, because it would guarantee the solidity of the software that manages the Ethereum protocol.
The novelty consists in fact in the merge or fusion of the Ethereum EH1 chain with a new chain to create ETH2 on a blockchain platform that allows a cheaper and more environmentally friendly mining. Transactions also become faster, resulting in increased use cases, particularly for the world of decentralized finance.
Ethereum's technological upgrade involves moving from the energy-intensive proof-of-work extraction method to the less energy-intensive proof-of-stake extraction method.
The "dress rehearsal" took place through the simulation of the new mining process on one of Ethereum's test networks called Goerli. The testnet mirrors what will then happen on the main network, the mainnet. The trial showed that the proof-of-stake assessment method significantly reduces the energy required to verify a block of transactions and that the merge process works.
The proof-of-stake method
The proof-of-work (Pow) mining model requires the solution of increasingly sophisticated mathematical equations by a massive number of increasingly powerful machines. With this method thousands of miners, or network nodes, compete to solve complex mathematical problems; the consumption of electricity is huge. Bitcoin mining follows a similar process; Recently a study calculated that to extract a single Bitcoin it takes as much electricity as a family consumes in nine years.
The POS (proof-of-stake) method – which Ethereum has been studying for years – uses much less energy because, instead of having millions of computers active in processing, it allows nodes with more coins to validate transactions. This method is based on the fact that users use their existing Ether cache as a transaction verification tool and mint tokens (the decentralized coinage of tokens allowed by smart contracts).
Ethereum has long been hampered by problems with speed and processing costs. It processes only 30 transactions per second as a proof-of-work blockchain, but plans to process up to 100,000 transactions per second once transferred to the POS method.
This will allow it to compete with smaller altcoins , such as Solana and Cardano, which already use Pos in part or in full, for decentralized finance applications such as trading, investing, lending, and even non-fungible tokens.