Ethereum upgrade prepares the blockchain for big energy-saving change next year, founder says

Ethereum’s major London hard fork makes transaction fees more predictable and prepares the network to upgrade to version 2.0 as soon as year end

The blockchain is moving to proof-of-stake mining, which is much more energy efficient than the proof of work model it currently uses, along with bitcoin

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Mining rigs for the Ethereum and Zilliqa cryptocurrencies at the Evobits crypto farm in Cluj-Napoca, Romania, on January 22, 2020. Ethereum, the world’s most widely used blockchain, is undergoing a major shift to proof-of-work mining that could lead to a 99 per cent reduction in energy use. Photo: Bloomberg

Published: 10:30am, 6 Aug 2021Updated: 10:30am, 6 Aug 2021

The most significant change to the Ethereum blockchain since 2015 that went into effect Thursday shows the network is well-poised to make an even bigger upgrade to reduce its energy use by 99 per cent, according to its inventor Vitalik Buterin.

The world’s most-used blockchain updated its software, known as the London hard fork, that includes a fee reduction feature called EIP 1559. The fee cut already eliminated US$2 million worth of its native cryptocurrency Ether in only a few hours since taking effect, according to tracking website ultrasound.money. That could put upward pressure on the price of Ether going forward.

“1559 is definitely the most important part of London,” Buterin said in an interview with Bloomberg News from Singapore. The London upgrade is “proof that the Ethereum ecosystem is able to make significant changes”.

Vitalik Buterin, co-founder of Ethereum. Photo: Handout

Ethereum and better-known-rival bitcoin both operate using a proof-of-work system that requires a global network of computers running around the clock. Software developers at Ethereum have been working for years to transition the blockchain to what’s known as a proof-of-stake system – which uses a totally different approach to secure the network that also eliminates the carbon emissions issue. That change to ETH 2.0 will be carried out by a process called the merge and is expected by early 2022 but could come as early as year end, Buterin said.

The London hard fork “definitely makes me more confident about the merge”, he said.

Ether has seen an already incredible price gain in the past 12 months, along with bitcoin and other digital assets. Ether has risen about 590 per cent in the past year, while bitcoin has more than tripled, according to data compiled by Bloomberg. Those gains come even after both coins fell by about half from their recent all-time highs in April.