It has been two years since ImpactScope started developing its first carbon offsetting tools for cryptocurrency exchanges and crypto mining companies such as Crypto2Cash and Arthur Mining. Central to our mission was to draw the world’s attention to the negative environmental impact of the Proof of Work consensus mechanism, and help to offset some of those CO2 emissions.
After years of persistence and working closely with industry associations, it is fantastic to see how the public conversation has changed, culminating in the long-awaited shift in the world’s second-largest cryptocurrency from Proof of Work to Proof of Stake.
Excessive energy consumption of Proof of Work has for a long time caused widespread criticism from environmental groups due to its extreme impact on our planet, especially as countries try to reduce their emissions in response to climate change. Finally, on September 15th 2022, the original Ethereum Mainnet merged with the Beacon Chain to exist as one chain.
The Proof-of-Work (PoW) mechanism secures the network through miners who operate power-hungry mining equipment in the hope of earning a share of block rewards and a percentage of transaction fees.
The Proof-of-Stake (PoS) mechanism requires that the network is secured by validators who perform the same role by staking ETH to validate the network. In this technology, the validators use relatively little power. The token holders validate transactions on the blockchain based on the number of staked assets.
According to the Ethereum Foundation, PoS is 2,000x more energy efficient than PoW. PoS was predicted to reduce energy consumption by 99.95%. This huge reduction will result in a significant decrease in CO2 emissions. The Merge also hit mainstream headlines on September 16th as a reported 0.2% of the world’s electricity consumption was slashed as miners unplugged an estimated $5b worth of mining hardware.
In 2021 on average each Ethereum transaction generated 86.43 kg of CO2 emissions, which was equivalent to the carbon footprint of 191,559 VISA transactions or 14,405 hours of watching Youtube. Thankfully, today that figure is less than one hundredth of one kilogram. Another way of looking at this is before the Merge it would require planting 2.5 trees to compensate for just one onchain ETH transaction. Today, planting the same amount of trees can compensate for almost 1,000 Ethereum transactions.
ImpactScope continues on its mission to mitigate the unintended environmental effects of Proof-of-Work consensus protocols and so suffice to say we were very excited about Ethereum’s switch to PoS as it significantly reduces CO2 emissions and the overall impact of crypto on the environment.
Would you like to learn more about the historical carbon footprint of your crypto wallets? Try the ImpactScope crypto wallet carbon footprint calculator tool today.