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Ethereum Energy Consumption after the Merge – Is ETH a Fully Eco-Friendly Blockchain Now?

By Farzad Vajihi – Analyst of stock market and cryptocurrency, Ph.D. in economics. 

Cutting down the network’s notoriously high energy consumption was the primary motivation behind Ethereum’s long awaited Merge upgrade. The hard fork that turned ETH into a Proof-of-Stake blockchain has massively reduced Ethereum’s electric consumption. But how much energy does ETH actually consume after the Merge, and is there a possibility that becoming an eco-friendly blockchain with low carbon footprint will eventually lead to Ethereum surpassing Bitcoin in market capitalization?

Ethereum’s Energy Consumption Before the Merge

All Proof-of-Work blockchains, such as Bitcoin (BTC) or Ethereum before the Merge, consume huge amounts of electricity. This is caused by the fact that mining new blocks on PoW blockchains requires solving extremely complex mathematical problems, which can only be done with specialized hardware.

According to some experts, the high energy consumption actually benefits a decentralized network, because it means that it’s almost impossible for a hostile actor to spam the blockchain with false transactions. However, growing concerns over climate change and the ongoing energy crisis make Proof-of-Work cryptocurrencies an easy target for environmental activists.

Before the Merge, the energy consumption of Ethereum ranged from 46 to 94 terawatt hour (TWh) a year. To put this in perspective, this is more electricity than a country the size of Switzerland uses yearly. Despite the fact that mining cryptocurrencies is mostly done with renewable energy sources, the Ethereum Foundation decided to abandon the Proof-of-Work architecture altogether, and switch to the Proof-of-Stake model to reduce ETH’s energy consumption.

How Did the Ethereum Merge Reduce ETH’s Energy Consumption?

In Proof-of-Work cryptocurrencies like Bitcoin, new blocks are added to the blockchain by mining, which can only be done with specialized hardware consuming tons of electricity. After the Merge, Ethereum no longer uses mining. Instead of being mined, new blocks are added to the blockchain by validator nodes.

In the case of mining, the energy used to create new blocks is used as a proof that all of the transactions in the block are valid. In the case of Proof-of-Stake, validators stake a specific amount of cryptocurrency. Currently, the amount of ETH required to run an Ethereum validator node is 32 ETH.

The main difference between miners and validators is that validators don’t have to use any special hardware machines. A validator node of Ethereum can be set up on an ordinary computer or laptop. In other words, running a validator node on the ETH blockchain only uses about as much energy as using your computer to browse the Internet or watch a movie.

How Much Electricity Does Ethereum Consume After the Merge?

Early estimates published by the Ethereum Foundation before the Merge was launched suggested a decrease in electric energy consumption of up to 99.95%. However, it turns out that the Merge worked even better than intended. According to estimates based on the current energy consumption data, Ethereum now utilizes only 0.01 TWh per year. This means that the ETH network’s energy consumption has been reduced by 99.99%. To put things into perspective, Ethereum now consumes not only less energy than Bitcoin, but also less than platforms like PayPal, YouTube or Netflix.

Energy consumption is not the only thing drastically reduced by the Merge. By switching from Proof-of-Work to Proof-of-Stake, Ethereum has also greatly decreased its CO2 emissions and carbon footprint. According to estimates, the ETH blockchain now only emits 0.1 million tonnes of CO2 annually. When it comes to the energy cost and carbon footprint of a single Ethereum transaction, it now uses only 0.03 kilowatt hour (kWH), and emits only 0.01kg CO2.

In other words, Ethereum has moved from consuming as much energy as a country, to only using about as much electricity as 100 typical American households use every year. It is now undeniable that the launch of the Merge upgrade has been a tremendous success, and that ETH can be considered a fully eco-friendly blockchain.

The massive decrease in carbon footprint and energy consumption can give Ethereum massive advantage over Bitcoin in the future. Due to the climate change and the energy crisis, governments of many countries have been debating the possibility of prohibiting mining Proof-of-Work cryptocurrencies. If that is really going to happen, Proof-of-Stake blockchains like Ethereum will benefit greatly.

Conclusion

Before the launch of the Merge, switching to the Proof-of-Stake model was a highly controversial subject among the members of the Ethereum community. However, it is now clear that the release of the Merge upgrade was a huge success. Ethereum has become much more efficient and consumes much less electric energy than before, which is of utmost importance in the age of growing energy crisis concerns.

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