Ethereum’s upcoming Merge is one of the most eagerly anticipated events in web3. Over the years since its 2015 launch, the plan to upgrade Ethereum has become a veritable moving target, undergoing several iterations and refinements. The version now becoming a reality recognizes that Ethereum doesn’t just need to become more scalable — it also needs to become more sustainable. The upcoming Merge will mark perhaps the most significant milestone in Ethereum’s journey to date — the shift away from the energy-intensive Proof-of-Work (PoW) consensus to the far more efficient Proof-of-Stake (PoS).
The Ethereum Foundation estimates the Merge will reduce Ethereum’s energy consumption by around 99.95%, making it over 2,000 times more efficient under PoS than PoW. The Foundation makes a helpful relative comparison — if the height of the Burj Khalifa, the world’s tallest building, represents Bitcoin’s energy consumption at 830m, Ethereum under PoW is comparable to the height of the Leaning Tower of Pisa at 57m. By switching to PoS, Ethereum’s energy consumption can be represented relative to the size of a 2.5cm screw.
It’s evident that the Ethereum Merge represents a great leap forward for sustainability in the digital asset sector, particularly given the scale of adoption of Ethereum and the sheer weight of applications and users it supports. We still shouldn’t be resting on our laurels when it comes to lowering our carbon footprint — Net Zero should be the goal. So what are some ways the blockchain sector can continue to become more sustainable?
Focusing on renewable energy is another way web3 can support a more sustainable future. It’s hard to pin down the precise extent of renewable energy adoption, but an article in the New York Times from last year estimated that between 40 and 75 percent of Bitcoin mining currently uses renewable energy sources. For miners there are economic benefits to be had — renewable energy is generally cheaper, which in the current market with the high price of electricity, isn’t a negligible advantage.
Ultimately, miners may find themselves compelled to focus on renewable energy, if regulators have their way. In March, the European Union only narrowly voted down an amendment that would have limited the use of PoW-based currencies across the block, while New York lawmakers are poised to to move miners away from carbon-based power sources.
However, fostering responsible mining operations can come with substantial benefits.
One example is in Sweden, where a mining firm runs a data center that works as a backup supply whenever disruptions to local power occur. Most of the time, it’s running as a profitable mining operation using hydroelectric power from domestic producers, but the machinery can be powered down, and the power supply routed into the grid when needed.
Through partnerships and collaboration, web3 can develop more creative solutions that don’t just solve the problem — they help to create a more sustainable outcome with benefits beyond the boundaries of the blockchain ecosystem. CoinFund lives part of its commitment to sustainability through a partnership with Apex Group and Nori to calculate and offset our Bitcoin carbon footprint. Nori’s web3 native carbon offset solution provides compensation to farmers in Nebraska for using regenerative agriculture techniques that promote soil carbon sequestration.
In any fair discussion about the environmental impact of our industry, it must also be pointed out that blockchain technology can be used for applications that create broader economic, environmental, or societal good that may offset the direct impact of the carbon emissions of any given project.
For instance, dClimate is a decentralized data marketplace for climate-related data, addressing the real gap in a unified source of trusted, verifiable data covering all aspects of the climate and the world’s natural resources.
It must be noted that web3 entrepreneurs often factor in sustainability when choosing a platform to build on. Platforms such as Solana or Polkadot that run using low-energy governance models have attracted a slew of development activity over recent years, meaning that incoming projects can now benefit from the network effects of an established ecosystem populated by early movers.
Web3 entrepreneurs who want to learn more about how the industry is working to become more sustainable or who want to do more to ensure their own project is future-proofing itself by establishing a Net Zero policy early on can also explore the Crypto Climate Accord. The CCA is inspired by the Paris Climate Agreement; a private sector-led initiative focused on decarbonizing the cryptocurrency and blockchain industry. It’s open to everyone in web3, and CoinFund is proud to be not just a supporter but a signatory to the Accord.
The Crypto Climate Accord is just one way that web3 entrepreneurs can support a move towards more sustainable business practices. However, we also need to continue to make careful choices when it comes to their platforms, partnerships, policies, and activities.
