Ethereum’s CO2 emissions declined to 8,824 tons from 21.95 million tons in just a year, according to a research study by Forex Suggest. The drastic reduction resulted from the Merge, which reduced Ethereum’s energy consumption per transaction from 62.56 kWh to 0.03 kWh. The Ethereum blockchain shifted from a proof-of-work consensus model to a proof-of-stake model in late 2022.
Ethereum’s Annual CO2 Emissions Down Nearly 100% After the Merge
A new report found that Ethereum’s carbon emissions plummeted from 21.95 million tons of CO2 to a meager 8,824 tons in just a year. The data represents a part of the broader research study by Forexsuggest.com titled “Global Impact of Crypto Trading.”
The report notes that Ethereum trimmed its annual CO2 emissions by roughly 100% after the Merge. By reducing the CO2 emissions by such a significant margin, the research found that only 44,121 trees would need to be planted to offset the cryptocurrency’s annual emissions, compared to 109,751,315 trees a year ago.
The Merge, which took place in September 2022, saw the Ethereum blockchain transition from the Proof-of-Work (PoW) to the Proof-of-Stake (PoS) model. In other words, the Merge removed the need for miners, making Ethereum significantly more energy efficient and reducing its gas fees.
“Ethereum has now moved from its PoW method of validating transactions to a PoS model. By doing this, the cryptocurrencies energy consumption per transaction has been reduced from 62.56 kWh to 0.03 kWh.”
Global Impact of Crypto Trading
Instead, the blockchain now relies on the so-called “validators” to verify transactions and secure the network. The PoS model allows users to stake ETH to earn a chance to create a block and become a validator.
The switch to the PoS model reduced mining rewards by around 13,000 ETH per day, leading to a 90% decline in annual ETH issuance. This drastic inflation reduction was expected to drive the value of ETH after the Merge, but that is not the case, as crypto prices remain depressed amid the persisting market downturn.
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Stellar – the Most Eco-Friendly Cryptocurrency
Forex Suggest’s report revealed that the most eco-friendly cryptocurrency is Stellar, with an energy consumption of just 0.0003 kWh per transaction. Launched in 2024, Stellar is a cryptocurrency that aims to facilitate financial transactions among users.
Other cryptocurrencies with low energy consumption include IOTA and Nano, consuming 0.00011 kWh and 0.000112 per transaction, respectively. Ripple, one of the most significant altcoins in the world, is also an energy-efficient cryptocurrency with a consumption of 0.0079 kWh per transaction.
The energy consumption and CO2 footprints of cryptocurrencies are becoming critical issues as humanity faces an urgent need to control global warming to achieve a sustainable future. In October, the European Commission revealed plans to develop a grading measure for cryptocurrencies to address growing concerns over their high energy consumption.
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Do you think other cryptocurrencies should also abandon the PoW consensus mechanism to help reduce the global CO2 footprint? Let us know in the comments below.
About the author
Tim Fries is the cofounder of The Tokenist. He has a B. Sc. in Mechanical Engineering from the University of Michigan, and an MBA from the University of Chicago Booth School of Business. Tim served as a Senior Associate on the investment team at RW Baird’s US Private Equity division, and is also the co-founder of Protective Technologies Capital, an investment firm specializing in sensing, protection and control solutions.