The long awaited modification of Ethereum known as the Merge has finally taken place, moving the digital machinery at the core of the second-largest cryptocurrency to a vastly more energy-efficient system after years of development and delay.
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In his tweet announcing the success of the transition, Buterin Vitaliks Ethereum CEO tweeted:
“And we finalized! Happy merge all. This is a big moment for the Ethereum ecosystem. Everyone who helped make the merge happen should feel very proud today. “
It was no small feat swapping out one way of running a blockchain, known as proof-of-work, for another, called proof-of-stake.
The payoff is potentially gigantic. Ethereum should now consume 99.9% or so less energy. From an energy costs perspective, it’s like Finland suddenly shut off its power grid, according to one estimate.
Ethereum’s developers say the upgrade will make the network – which houses a $60 billion ecosystem of cryptocurrency exchanges, lending companies, non-fungible token (NFT) marketplaces and other apps – more secure and scalable, too.
The update, which ends the network’s reliance on the energy-intensive process of cryptocurrency mining, has been closely watched by crypto investors, enthusiasts and skeptics for the impact it is expected to have on the wider blockchain industry.
In the minutes immediately following the Merge, ETH was trading at $1,594 down about 0.81% in the past 24 hours.
Ethereum’s new system, proof-of-stake, does away with mining entirely.
Miners are replaced by validators – people who “stake” at least 32 ETH by sending them to an address on the Ethereum network where they cannot be bought or sold.
These staked ETH tokens act like lottery tickets: The more ETH a validator stakes, the more likely one of its tickets will be drawn, granting it the ability to write a “block” of transactions to Ethereum’s digital ledger.