©Reuters. Illustrative file image of a representation of Ethereum, with its native cryptocurrency ether, taken on November 29, 2021. REUTERS/Dado Ruvic/Illustration/File
By Elizabeth Howcroft and Maria Ponnezhath
LONDON, Sept 15 (Reuters) – The blockchain has undergone a major software upgrade, drastically reducing its energy use, its inventor and co-founder tweeted on Thursday.
The new system will use 99.95% less energy, according to the Ethereum Foundation. The upgrade, which changes the way transactions occur and how ether “tokens” are created, could give Ethereum a significant advantage as it tries to overtake its rival.
“We think this is a significant moment that will see ETH outperform the broader cryptocurrency market for some time,” said Richard Usher, head of OTC trading at London-based crypto firm BCB Group.
Most blockchains consume large amounts of energy and have been criticized by environmentalists and some investors. Before the software update, known as “Merge”, a single transaction in Ethereum consumed as much energy as the average American household uses in a week, according to researcher Digiconomist.
“Happy melting everyone,” inventor Vitalik Buterin said in a tweet. “This is a great time for the Ethereum ecosystem.”
Ethereum was born in 2013. Its proponents say it will form the backbone of much of the widely publicized but as yet unrealized “Web3” vision of an internet in which crypto is at the center of applications and commerce.
The ether cryptocurrency fell as much as 4% to $1,571, a move analysts attribute to a cautious mood for risk assets in general.
Investors had previously bet that the rally would bolster the price of ether, which has gained nearly 85% since its June low, above the 15% rise of its biggest rival Bitcoin.
(Edited in Spanish by Carlos Serrano)