Illustration: Victoria Ellis/Axios
The world's second-biggest cryptocurrency network, Ethereum, is pivoting to a new system that will use vastly less electricity.
Why it matters: One of the biggest knocks on cryptocurrencies centers on the enormous amount of energy its networks consume. But with this change, known as "The Merge," trading in one of the leading currencies will be no more energy-intensive than playing an online video game.
How it works: Cryptocurrency networks use so-called "consensus mechanisms" to ensure that transactions are valid. Those tools keep track of who owns what and ensure that no one spends any currency that isn't theirs.
- The original consensus mechanism, "proof-of-work," is the reason crypto uses so much energy.
- Ethereum is switching to a new strategy, "proof-of-stake." It'll be an expensive shift, but after it happens, Ethereum's energy use might only be about 1% of what it was before, according to the Ethereum Foundation.
Yes, but: Up till now, Ethereum has used a lot of power, but Bitcoin always has been — and will continue to be — the industry's biggest energy user, by far.
Our thought bubble: Years in the making, The Merge is easily 2022's biggest cryptocurrency moment, after the bull market's end in May.