Ethereum's energy usage and crypto-coin price plummeted after 'The Merge'

Ethereum's energy usage and crypto-coin price plummeted after 'The Merge'

Ethereum has completed “The Merge”. While energy costs to mine the cryptocurrency are expected to come crashing down, the price of Ethereum has already seen a substantial dip.

Ethereum cryptocurrency finally and fully abandoned proof-of-work for proof-of-stake validation. Surprisingly, there were no last-minute hurdles or problems while the world’s second-most popular cryptocurrency endured a fundamental shift. However, investors surely felt the jitters, and unloaded a lot of their holdings, resulting in the price of Ethereum crashing, before stabilizing at a lower level.

Until today, Ethereum was validated using Proof of Work (PoW). Just like Bitcoin, PoW mandated solving ever-increasing mathematical problems to validate transactions. However, moving forward, the current holders of Ethereum will be able to put forth part of their crypto coins to become validators.

Currently, the Ethereum network is asking cryptocurrency owners to stake over 32 ETH (about $48,000 according to the exchange rate). Staking their own crypto coins would allow owners to be a validator on a block. A validator or a “staker” is responsible for checking the legitimacy of that block's transactions.

A cryptocurrency has traditionally relied on miners, but Ethereum will now rely on multiple validators to check the legitimacy of a transaction. Unlike PoW, the PoS system needs validators to perform some simple calculations. If a positive consensus is reached, the block and its transactions are validated.

Using this seemingly simple system of validation, the energy costs of Ethereum should decrease by around 99.95 percent, claimed the Ethereum Organization. If accurate, this might be the most eco-friendly any cryptocurrency can get in current conditions.

Ethereum was trading at about $1650 in the morning, but the price started slipping, and bottomed out at $1477, before crawling back up and stabilizing at the $1500 mark. Simply put, Ethereum lost about 9% of its value in a single day, and that seems to be because of “The Merge”.