A look at energy usage in crypto

A massive software upgrade called “The Merge” will officially come into effect for Ethereum, the world’s second-largest blockchain, sometime between today and Thursday, per co-founder Vitalik Buterin.

In case you missed our previous coverage, the Merge essentially means Ethereum is transitioning from a verification system called “proof-of-work” to a new system called “proof-of-stake” – theoretically cutting the blockchain’s overall energy consumption by 99+% in the process.

• Ethereum mining consumes about 72 terawatt-hours of energy per year in its current form, roughly equivalent to the total needs of Switzerland (pop. 9 million). But it’s obviously not the only blockchain.
• Bitcoin, the world’s largest blockchain, also relies on the energy-intensive “proof-of-work” system. Its mining consumes an estimated 150 terawatt-hours per year, more than the entire country of Argentina (pop. 45 million).

🪙 Zoom out: Nine countries, including China, have banned the mining of bitcoin or crypto altogether over the past few years due in part to its high energy consumption (though there are other driving factors).

And in the US, new gov’t statistics show crypto mining draws as much energy as the nation’s entire home computer usage combined (between 0.9%–1.7% of total consumption). America currently does 38% of the world’s bitcoin mining – up from 3.5% in 2020.

• If Ethereum’s new update succeeds in dramatically lowering its energy consumption, US lawmakers will likely implement regulation forcing bitcoin to move away from its “proof-of-work” system as well, per multiple crypto experts.