On April 12th at 19:27 Eastern Time, Ethereum will undergo a fundamental shift in the way network security is ensured and transactions are verified with its upcoming “Shanghai” update, marking the culmination of a process that involves a switch from a proof-of-work (PoW) mining system to a proof-of-stake (PoS) system. This move has rekindled the debate about the viability and sustainability of the mining practice that supports Bitcoin, the most widely traded cryptocurrency. According to figures from the University of Cambridge, the Bitcoin network consumed 107 terawatt-hours of energy in 2022, equivalent to the energy consumption of the Netherlands.
Prior to the “Shanghai” update, Ethereum consumed about two-thirds as much energy as the Bitcoin network. However, a switch away from mining has resulted in a significant reduction in energy consumption, estimated to be at least 99.84%, according to Alex de Vries, data scientist at De Nederlandsche Bank and creator of Digiconomist, a source of crypto emissions data. This shift has resulted in a proxy battle over the future of cryptocurrency.
Bitcoin mining is typically done in regions with low or no demand by purchasing excess renewable energy when the grid does not require it, increasing the profitability of solar and wind farms and expediting the transition to sustainable energy sources. However, critics of bitcoin claim that these arguments do not hold up under scrutiny, and bitcoin mining is exacerbating the environmental impact of fossil fuels.
The impasse is exacerbated by the ideological opposition to PoS among bitcoin supporters, which is unrelated to environmental concerns. Some bitcoiners regard the idea of modifying Satoshi Nakamoto’s original invention as unthinkable, while others believe that PoS increases the risk of centralization and censorship, posing a threat to the foundational principles of crypto.
Both parties have become entrenched in their positions, and any morsel of information that might be used to discredit the opposition is seized upon. The result is a situation in which both parties lob insults across the void but register none of the legitimate or well-intentioned complaints.
The Greenpeace campaign called “Change the Code, Not the Climate” aims to push for changes in the Bitcoin code base that would reduce the network’s emissions, while bitcoin supporters accuse Greenpeace of being partially funded by Ripple, a company interested in promoting XRP, a cryptocurrency that competes with bitcoin. The Skull of Satoshi, an art installation unveiled by Greenpeace activists, is named after the pseudonymous creator of bitcoin and is designed to symbolize the dual contribution of crypto mining to carbon emissions and e-waste.
In conclusion, the debate over the environmental impact of cryptocurrency mining is ongoing, and the Ethereum’s “Shanghai” update marks a significant shift in the way network security is ensured and transactions are verified. While there are arguments on both sides of the issue, the impasse has made it challenging to have a nuanced discussion about the industry. The key question is whether the benefits of cryptocurrency mining justify its environmental impact, and that is a matter of personal opinion.
