The creator of Ethereum, the second largest cryptocurrency in the world, says that its carbon footprint is of increasing concern, and he hopes that efforts to cut it by 99 per cent are just six to nine months way, despite years of delay.
“You don’t want to be wrecking the environment and you don’t want to be like taking energy away from villages in Iran or whatever. You could easily see increasing the world temperature by at least percentage points of a degree. That’s not very nice,” says Vitalik Buterin, who launched the currency in 2015 at the age of 21. He is now a billionaire.
Most cryptocurrencies rely on “proof of work” to secure their networks, meaning that computers perform huge numbers of calculations to “mine” new currency and verify transactions. This uses vast amounts of electricity.
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While there are no accurate estimates for the total consumption of Ethereum, a University of Cambridge places bitcoin’s overhead at 111.51 terrawatt-hours – slightly more than consumed by the whole of the Netherlands.
But, unlike bitcoin, Ethereum has also been preparing to switch its entire infrastructure to proof of stake, a system where ownership of coins wields influence rather than control of computing power. Critics such as Gene Hoffman, president of rival currency Chia, say it will be inherently centralising and that “the rich will get richer”.
The experiment is being watched by many who see it as a potential solution to the energy consumption of cryptocurrencies. The energy use of Ethereum has been rising ever since it launched, thanks to growing adoption and more organised mining. Buterin says the energy demands of the currency weigh on him and that the switch is driven by one part ethics and one part a pragmatic design to improve the network. “It’s always wonderful when things line up in that way,” he says.
A proof of stake blockchain has been running for several months already and work is ongoing to incorporate the existing network into it. Between now and launch there will be new features to develop and rigorous testing. “Most of the way from here is just about being careful,” says Buterin, but “there’s definitely a limit to how confident you can be and at some point you have to just sort of like, you know, jump”.
Although Buterin created the currency, he admits that he no longer has “an infinite amount of influence” and that the ultimate decision will be down to a team of core developers who meet once every two weeks to discuss progress. The date and time decided on will be made public a few weeks before the switch.
The plan is unlikely to go entirely smoothly. Ethereum miners revolted against previous changes to the network which had merely lowered their income, and the switch to proof of stake will completely remove their revenue.
“The transition completely removes the role of miners in the ecosystem, and obviously miners have been very unhappy about that, but we have been very open about the fact that this transition will happen for like basically more than six years,” says Buterin.
Unlike Ethereum, bitcoin users show no signs of addressing its energy use – the cryptocurrency has no governing body, so it is difficult to build a consensus for change.
Tesla founder Elon Musk, who announced that the car-maker had invested $1.5 billion in bitcoin earlier this year, performed an about-turn just months later and promised not to touch the coins until a solution to the currency’s electricity hunger was found. “When there’s confirmation of reasonable (~50%) clean energy usage by miners with positive future trend, Tesla will resume allowing Bitcoin transactions,” on 13 June.
But Buterin says he is sceptical about efforts to simply switch to renewable power. “Even if bitcoin mining becoming green fully succeeds then guess what: the coal plants are still there,” he says. “And so that power is going to become cheaper and all of the ‘I don’t care’ people are just going to switch to using coal power more.”
