Ethereum blockchain is set to cut its ties with crypto mining, and the long-awaited “Shanghai” update is causing a lot of anticipation. Ethereum, which is home to the second-most-popular cryptocurrency, ether, will change the way transactions are verified and the network is secured. The update will shift the blockchain from proof-of-work (PoW) mining to proof-of-stake (PoS) mining. The new system will eliminate the race to solve a mathematical puzzle that miners undergo, with the winner being determined through raffle. By demonstrating that a blockchain can shift from one system to another, the update reignites a debate over the viability and sustainability of the mining practice that supports Bitcoin.
The consumption of energy by the Bitcoin network has been a growing concern, especially as the price of Bitcoin rises. The higher the price of Bitcoin, the more money miners make, and the more they spend on resources such as hardware and electricity. Although miners claim that mining is powered by renewable energy, critics argue that the Bitcoin network is energy-guzzling and carbon-intensive. Some Bitcoin proponents argue that mining incentivizes the development of renewable energy by plugging gaps when demand is low.
Critics of Bitcoin argue that the common defenses of Bitcoin mining are magic tricks that obscure inconvenient truths and provide the illusion of clean and profitable investment. Bitcoin mining creates new life for fossil-fuel plants, and miners in countries such as Iceland are outcompeting other energy consumers. While Pritzker argues that the scrutiny of Bitcoin’s environmental credentials is out of proportion with the emissions it produces, critics argue that Bitcoin mining is not a sustainable energy solution.
The Shanghai update will be a proxy battle over the future of crypto, with some arguing that PoS is inferior to PoW. PoS is prone to centralization, concentrating influence and wealth in the hands of the wealthy, without any mitigating forces, like energy costs, pulling in the opposite direction. Although Bitcoin proponents argue that producing low-emission energy must be profitable, critics argue that there is no such thing as wasting energy sustainably. The debate ultimately hinges on personal opinion.