While most people are concerned with the energy consumption of Bitcoin, or rather, the process of its mining, many fail to acknowledge that Ethereum, among the top three cryptocurrencies in the world by market cap, is consuming not less energy than the “people’s currency”.
Ethereum reportedly consumes around 25%-50% of what Bitcoin does, which means that Ethereum actually used roughly the same amount of electricity that Iceland did in 2018. According to IEE Spectrum, to mine one unit of Ethereum requires the equivalent of the energy consumption of one American household in a day.
Ethereum was once trading for around $1,300 per coin. Now, in January 2019, one coin is trading at around $150. While the price has declined drastically, the founder of Ethereum, Vitalik Buterin, plans to seriously cut the energy consumption needed to mine the cryptocurrency.
The plan is to create a new Ethereum code, that, if successful, will enable the energy-efficient mining of the alt coin and reduce the energy needed to 1% of what it is currently today. The promising low-energy “format” of Ethereum is expected to be introduced some time in 2019.
The proof-of-work concept, or POW, that Ethereum uses is the primary reason why the cryptocurrency consumers so much energy. Buterin believes that it is essential to cut the energy consumption and costs related to mining the coin.
The hope is to replace the POW mechanism with the POS one (proof of stake), where not millions of processors process the same transactions at the same time – the concept used in POW. The implementation of POS should help minimize the energy consumption of mining Ethereum significantly.
Apart from making Ethereum more energy-efficient, the new “rebirth” of the coin will essentially mark one of the most ambitious and important open community projects in the cryptocurrency world, where millions of miners and the Ethereum community will come together to “build and agree on” the new, better Ethereum.