Ethereum, the world’s second-largest cryptocurrency by market value, is facing increasing scrutiny over its environmental impact as the network continues to grow.
Critics say Ethereum’s “proof-of-work” consensus algorithm, which is used to verify transactions on the network and create new ETH tokens, consumes a large amount of energy.
In fact, research firm Digiconomist estimates that each Ethereum transaction requires about 52 kilowatt-hours (kWh) of electricity, which is more than enough to power an average U.S.
household for two days.
What’s more, Ethereum miners are rewarded with ETH for verifying transactions, which means they have a financial incentive to keep the network running even if it’s not profitable.
This has led some to believe that Ethereum will eventually “burn out” as the network consumes more and more energy.
However, it’s worth noting that Ethereum’s co-founder Vitalik Buterin has said that the network could eventually move to a “proof-of-stake” consensus algorithm, which would be much less energy intensive.
In the meantime, there are ways to make Ethereum mining more environmentally friendly, such as using renewable energy sources or using efficient mining hardware.
It’s also worth noting that Ethereum is not the only cryptocurrency with a large carbon footprint. Bitcoin, the world’s largest cryptocurrency by market value, also consumes a significant amount of energy.
So does Ethereum burn coins? While the answer may be yes in a sense, it’s not necessarily something to worry about in the long run.