Ethereum 2.0 - Less Energy Consumption

Ethereum 2.0 - Less Energy Consumption

By Shiftrox | Neutral Field | 6 Aug 2021


EIP-1559

The Ethereum cryptocurrency platform will receive an update that promises to reduce energy consumption, although this update is a great thing, it has worried some miners, as this news will lead to a decrease in profits. Even so, many investors are excited and eager for the news, as unit prices will tend to rise.

Called “Ethereum Improvement Protocol 1559” or EIP-1559, the main purpose of the implementation is to ensure more predictable transaction fees and with more security.

Currently, bidding takes place between users, with the rate being variable as disputes are in progress, dedicated entirely to miners who validate the transactions. As of the launch of the new protocol, an algorithm will determine the base transaction rate based on traffic and will be displayed in advance, providing more time and security for everyone to process their business.

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What worries the miners, in this scenario, is that they will not receive the amounts related to the fees, losing a large part of their income sources. The change also reduces the need for a powerful computer, making more people able to mine with an entry-level PC, for example. This fact can disable the powerful and expensive “mining rigs” created by Ethereum adepts.

Although there is nothing to stop miners from becoming validators, part of the problem will be that many of them will have expensive and sophisticated equipment that is now useless

Points out Coinmarketcap. In any case, it is possible to reward them for urgent transactions, leaving it to investors who choose to do so, stresses Coindesk.

Limiting supply

Going into the issue of energy consumption, the changes to be implemented will reduce the computing power required by mining by up to 99%, and this will encourage the construction of new platforms for the Ethereum network.

Each transaction will withdraw some supply from the market and dedicate it to an inaccessible wallet. With limited offers, more demand will be generated and, consequently, greater appreciation.

One reason for Bitcoin's relative premium is its fixed supply [limited to 21 million coins], potentially making it more suitable as an asset to store long-term value than one with infinite supply [in the case of Ethereum]. With EIP-1559, the company is taking the first step to reduce emissions, with peak supply projected for February 2022

Explained Lucas Outomuro, head of research at Into the Block, on Twitter.

Finally, the calculations will become so difficult and complicated that, at some point, autonomous validations, outside of algorithms, will become unfeasible, discouraging constant mining that will no longer bring the expected return.


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Shiftrox
Shiftrox

Games lover and getting to know the blockchain world more and more. Games and Fun!


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