The mining of Ethereum, one of the most popular cryptocurrencies, is no longer done according to proof-of-work. This should immediately reduce the demand for high power consumption (from heavy video cards).
The consortium behind Ethereum would have indicated in 2017 that it would replace proof-of-work with a better alternative, but the update of the blockchain was postponed for years. Since this morning, the switch has been fully completed, co-founder Vitalik Buterin also joyfully announced on Twitter.
Ethereum has been mined with proof-of-stake since the so-called Bellatrix upgrade. Ethereum is obtained by investing a validated share of it, instead of having hundreds of thousands of video cards worldwide solve the same puzzles. The programmers behind the Ethereum blockchain believe that the total energy consumption of the cryptocurrency could be reduced by about 99.95 percent.
“[De overstap op proof-of-stake] will reduce global energy consumption by 0.2 percent,” said Justin Drake, an analytical researcher at Ethereum.
The changes on the blockchain are still little noticeable — in the run-up to the update, the global hashrate remained almost unchanged — but the coming weeks may show more consequences of the switch.
Expectations are (once again) an exodus of second-hand video cards, which will be less and less relevant for crypto farmers. An influx of second-hand supply may also drive down asking prices for new graphics cards from AMD and Nvidia — both of which are also eager for next-generation GPUs.
Regardless of precise repercussions, Ethereum at least requires less power. The industry is also likely to pose less of a threat to new chip shortages or overly high asking prices for video cards. Both problems were greatly exacerbated by Ethereum, with a painful period for the hardware sector especially after the end of 2019.