The software upgrade, known as “the merge,” will change the way transactions are handled on the ethereum blockchain, a public and decentralized ledger that underpins the cryptocurrency and creates ether tokens, the world’s most popular cryptocurrency after bitcoin. Vitalik Buterin, the inventor of ethereum, announced the project’s completion on Twitter Thursday morning, tweeting “Happy merge all.” And we finalized! Happy merging everyone. This is a great moment for the Ethereum ecosystem. Everyone who helped make the merger happen should feel very proud today. — vitalik.eth (@VitalikButerin) September 15, 2022 The move means that ethereum will no longer be created by an energy-intensive process known as “mining,” where banks of computers generate random numbers that validate transactions on the blockchain and create new ether tokens as part of the process. The process, known as “proof of work” in the cryptocurrency world, will now transition to a “proof of stake” system, where individuals and companies act as validators, pledging or “staking” their own ether as a form of guarantee, earn tokens created recently. Ethereum mining consumed as much electricity as Austria, according to the website Digiconomist, at 72 terawatt hours per year. Alex de Vries, the economist behind the site, estimates that the merger will reduce the carbon emissions associated with ethereum by more than 99%. De Vries added that the move could represent 0.2% of global electricity consumption disappearing overnight. However, he said bitcoin remains the largest single contributor to the cryptocurrency world’s carbon footprint. “All eyes will be on bitcoin. It remains the biggest polluter in the crypto space. Even today bitcoin is responsible for as much electricity consumption as Sweden. And we know that’s not going to change,” De Vries said. Ethereum rose 2% to $1,630 (£1,417) after the move, according to website coinmarketcap, valuing the currency at just under $200 billion. Bitcoin is worth $387 billion, having fallen sharply from a peak of more than $1 trillion last year. Subscribe to Business Today Get ready for the business day – we’ll point you to all the business news and analysis you need every morning Privacy Notice: Newsletters may contain information about charities, online advertising and content sponsored by external parties. For more information, see our Privacy Policy. We use Google reCaptcha to protect our website and Google’s Privacy Policy and Terms of Service apply. Carol Alexander, professor of economics at the University of Sussex Business School, said the merger was an important event for the crypto industry “The merger is the most important event in blockchain history,” he said. “In my opinion, today marks the beginning of the end of bitcoin’s dominance of crypto assets. Ethereum achieves something that bitcoin never could because bitcoin is a purely speculative asset and its mining network would never agree to give up this source of income.”
