In a few weeks, Ethereum is slated to undergo the most significant change in its seven-year history. Until now, the Ethereum blockchain has been secured using a method called “proof-of-work,” which consumes more electricity than the entire nation of Belgium. Next month’s switch to a new method called “proof-of-stake” is expected to cut Ethereum’s energy consumption by a factor of 1,000.
The stakes are high. A botched transition could mean chaos for the many crypto projects built on top of Ethereum. A smooth transition would be the culmination of years of careful planning by Ethereum’s core developers. Over the last year, developers have repeatedly pushed back the date of “the Merge” to give themselves more time to prepare. They completed a final dress rehearsal on August 10, clearing the way to make the switch in mid-September.
The most immediate consequence of a successful Merge will be to put the world’s Ethereum miners out of work. Over the last seven years, thousands of people have bought high-end graphics cards to help maintain the Ethereum blockchain—and to earn newly created ether in the process. The new system for updating the Ethereum blockchain doesn’t require the same kind of beefy hardware—or the massive electricity bill that goes with it. So the price of used graphics cards might continue to fall as Ethereum miners exit the industry.
But the switch to proof-of-stake is much more than just an energy-saving measure—it’s a major overhaul of the Ethereum network. Ethereum founder Vitalik Buterin believes the Merge will lay the foundation for a series of future upgrades that will allow the network to handle a much larger volume of transactions in the coming years. But critics worry that the new scheme could cause the Ethereum network to become overly centralized—and hence vulnerable to government regulation.