What Does the Ethereum Merge Mean for the Crypto Mining Ecosystem?
The Ethereum blockchain completed a significant software upgrade, which significantly reduced power consumption, and Ethermine, the top Ethereum mining pool operator in the world by computing power, closed its facilities to miners.
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What is Ethereum?
After Bitcoin, Ethereum has become the most widely used cryptocurrency. However, it functions as more than just a means of transaction or a repository of wealth. In general, Ethereum is described as “a distributed public ledger with smart contract capability that is decentralized and open source.”
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The Ether (ETH) token powers the Ethereum network, which was established in 2015 by Vitalik Buterin and Gavin Wood. Through this network, users can transact, trade cryptocurrencies, buy and store NFTs and more. It serves as a platform for the development of decentralized apps and exchanges.
What is Ether Mining?
Over the past few years, ether mining has grown into a multi-billion dollar industry. The game involves miners competing with each other to be the first to complete mathematical challenges and receive a token reward.
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Mining pools like Ethermine combined processing capacity from a number of miners before spreading the incentives among the miners to increase the chances of winning Ether. The company usually charges a fee for its services.
Investors and environmentalists have criticized most blockchain systems since they use a significant amount of energy. According to researcher Digiconomist, well before the software update, one Ethereum operation required as much electricity as a typical American household uses in a week.
What is the new “merger”?
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The cryptocurrency Ethereum has the opportunity to significantly cut down on both energy use and the accompanying climate-related emissions with a complicated software upgrade. However, the “merger” as a transition will not be sufficient on its own.
The lengthy process known as “The Merge” converts the blockchain’s proof-of-work (PoW) consensus method to proof-of-stake (PoS). Due to Ethereum’s decentralized nature, there is no centralized authority, such as a bank, to authorize and verify transactions between two individuals. As a result, the platform uses PoW as its consensus technique, which involves having consensus and transaction validation from each network participant. The network’s users, known as miners, perform this validation.
All the miners strive to figure out complex mathematical challenges, and the first to achieve this becomes the validator, adding the final block to the blockchain. Mining is done using computers that use hardware that consumes a significant amount of electricity.
The role of validator, on the other hand, is undisputed in PoS. An algorithm randomly selects a validator from a set of individuals who “risk” their coins. As a result, miners are no longer needed.
Vitalik Buterin, the creator of Ethereum, tweeted Thursday afternoon, “Happy merging to everyone.” The entire cryptocurrency sector honored the occasion globally. On Twitter, the hashtag #Ethereummerge was trending. The “Ethereum Mainnet Merge Viewing Party” on YouTube attracted more than 40,000 viewers.
Why is it called “the merger”?
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In 2020, Ethereum unveiled a PoS network known as the Beacon Chain. However, it is not yet used to handle transactions. The Beacon Chain must be connected with the mainnet, or PoW operating network, of Ethereum to complete the change of consensus method. Thus the name “The Merge.” The merger is “the idea of replacing an engine from a running car,” according to a researcher who spoke to CoinDesk, a global platform for crypto news.
How will it benefit the environment?
The Ethereum merger may not seem like much, but it could have serious consequences. According to calculations made by analyst and creator of the Digiconomist company, Alex de Vries, the change will save Ethereum approximately 99% and 99.99% of current electricity consumption.
He argued that a relatively small change to the code would have a significant effect on environmental sustainability. Up to 900 billion calculations per second were performed by Ethereum before the merger, but these calculations are no longer necessary.
His estimates indicated that Ethereum was annually responsible for around 44 million metric tons of carbon dioxide emissions. These will now be significantly reduced if he is right.
