The Ethereum blockchain has undergone a major software upgrade known as Merge which has significantly reduced its energy consumption.
The upgrade, which changes the way transactions take place and how Ether tokens are created, could give Ethereum a significant advantage as it tries to outperform rival blockchain Bitcoin while consuming 99.95% less energy.
“We believe this is a turning point that will lead ETH to outperform the broader cryptocurrency market for some time to come,” said Richard Usher, head of over-the-counter trading at Ethereum.
Once the Merge software has been upgraded, Ethereum will no longer require a large amount of energy for transactions. Following the upgrade, Ethereum will also move from a proof-of-work system, in which energy-hungry computers confirm transactions by solving complex mathematical problems, to a proof-of stake system, in which individuals and companies act as validators by using their ether as collateral to win newly created tokens.
Merge will not immediately address these issues of high costs, energy consumption and slow transaction times, but analysts believe it will pave the way for Ethereum’s growth.
Ethereum has gained about 85% since its low point in June, surpassing the 15% gains of its larger rival Bitcoin. Overall, cryptocurrencies have suffered this year, with Bitcoin and Ether both falling by about 55%. Ethereum now also accounts for about a fifth of the $1 trillion cryptocurrency market.
The sources for this piece include an article in Reuters.