By Diksha Madhok, CNN Business
Ethereum, the second most valuable in the world cryptocurrencyhas completed a massive software update that its supporters say will reduce its carbon footprint.
The long-awaited renovation, known as “The Merge”, will reduce Ethereum’s power consumption by nearly 99.95%, according to the Ethereum Foundationa non-profit organization dedicated to supporting cryptocurrency and related technologies.
“The Merge refers to the original Ethereum Mainnet merging with a separate blockchain called the Beacon Chain,” he added.
Until now, both ethereum and bitcoin worked on a mechanism called “proof-of-work”, whereby high-powered computers were required to solve complex puzzles. The merger shifts ethereum onto a mechanism called “proof-of-stake”, which is much more energy efficient.
“Happy merge all”, Vitalik Buterin, the 28-year-old Russian-Canadian programmer who helped create Ethereum said on Twitter. “This is a great time for the Ethereum ecosystem. Everyone who helped bring about the merger should feel very proud today,” she added.
The co-founder said the upgrade “will reduce global electricity consumption by 0.2%”.
While cryptocurrencies have seen a phenomenal rise in recent years, observers say they are terrible for the environment. According to Digiconomista platform that tracks crypto energy usage, a single Ethereum transaction equates to the weekly energy consumption of an average US household.
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Earlier this month, said the Digiconomist that power saved as a result of the update it would be “probably equivalent to the electricity consumption of a country like Portugal”. It could also become the “final nail in the coffin” for the bitcoin transaction mechanism.
Ethereum fell 0.7% after the news, trading at $ 1,592.78, but analysts say the upgrade could have a big impact on the cryptocurrency world in the long run. The world’s most valuable cryptocurrency, bitcoin, fell nearly 1%, trading at $ 20,174, according to CoinDesk.
“It’s been a long time and the question on traders’ lips right now is whether it will be the next bullish catalyst for cryptocurrencies or a ‘sell the fact’ event,” Craig Erlam, senior market analyst at Oanda, wrote in a statement. Thursday.
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