There’s a possible game-changing shift afoot in the cryptocurrency world. Supporters of Ethereum — currently the number two digital currency behind Bitcoin — claim that a breakthrough in its structure could reduce its current 45,000-gigawatt usage to 1/10,000th of that level.
Energy is not an aspect of cryptocurrency that’s been talked about much, but it’s a crucial element. By design, it takes vast amounts of energy to keep systems related to cryptocurrency running. That’s because everything is computer-based, and if the integrity of a cryptocoin’s blockchain isn’t kept secure, the coin’s functionality could implode.
Software engineers at both Ethereum and Bitcoin have been working tirelessly on a way to secure their networks without leaving a massive carbon footprint. And it certainly is massive right now. Bitcoin’s energy usage, according to the Cambridge Bitcoin Electricity Consumption Index, is larger than the countries of Pakistan, the Philippines, the United Arab Republic, and the Netherlands.
“With the amount of pollution we have in the world right now, making a change for a greener tomorrow is more important than ever,” suggests the Money Builders Project in its analysis of Ethereum’s shift.
“With more and more people adopting solar panels for their homes, and electric vehicles becoming more popular, almost everybody is trying to do their part for the environment. Now I'm excited to say that Ethereum has decided to join the party. Users and developers of the blockchains have been punching out a massive carbon footprint with traditional mining techniques”
Can this catapult Ethereum past Bitcoin?
If Ethereum’s engineers can pull this idea off, it could completely change the cryptocurrency game — and not only in the energy aspect; it could also increase the speed at which Ethereum can process transactions. Once that happens, the digital currency should be able to compete more effectively in the real world against established payment networks like Visa or Mastercard.
“It’s hard to ignore that the ESG narrative is going to be big,” Wilson Withiam, an analyst at Messari, told Bloomberg News. “If you’re looking at Ether as an investment, it doesn’t have that looming over it.”
Where will this leave Bitcoin? Pantera Capital, an early Bitcoin investment firm, supports Messari’s notion.
“Ethereum has a massive ecosystem of decentralized finance use cases with rapidly growing adoption,” Dan Morehead, founder of Pantera, wrote in a note to investors. “Combine these two dynamics and we think Ethereum will keep gaining market share relative to Bitcoin.”
Ethereum is well on its way to doing that. As of Monday morning, it has shown 228.57% growth year-to-date. Bitcoin’s ride has been a bit wobblier, but it’s still showing a respectable growth of 27.42% year-to-date.