Home Technology How Ethereum Merger Could Solve NFT’s Power Consumption Problem

How Ethereum Merger Could Solve NFT’s Power Consumption Problem

0

Like Ethereum takes its final step towards The Mergethis will change the cryptocurrency consensus mechanism from From Proof of Work (PoW) to Proof of Stake (PoS). This improvement could also be the solution to fix non-fungible token (NFT) energy issues. Simply put, the Ethereum network should be 99% less energy intensive, transferring power from the hands of crypto miners to a completely decentralized mechanism, where no one controls the Ethereum network.

Crypto mining consumes a lot of hashing power (computing power) and resources because of the PoW algorithm. It works by asking all nodes (devices) to solve a cryptographic puzzle. This puzzle is solved by the miners and the first to find a solution gets the reward. This has led to a lot of competition and situations where people are building bigger mining farms.

The more hash power you have, the easier it becomes to mine a coin. To further increase their chances of winning, miners come together in so-called mining pools, where they combine their hashing power and distribute the rewards evenly, ultimately forcing miners to use huge amounts of electricity.

It should be noted that Ethereum is the only token that offered the possibility of considering the blockchain as more than just a method of transferring money. The technology was developed to create use cases, and a popular innovation is NFTs. Minting (creating) a digital asset is commonly done on the Ethereum network, and it is a natural choice for 95% of NFT buyers, according to DappRadar metrics.

This is because Ethereum-based NFTs are highly secure and have a huge potential market, which means they are sold at a much higher price. Popular NFT markets like OpenSea, Rarible and Nifty Gateway are all based on the Ethereum network.

However, minting NFT through Ethereum is energy intensive. For this, we need to understand what happens behind the scenes when an NFT is minted or created on an Ethereum blockchain. So if you decide to mint an NFT, the transaction now needs to be verified, which is done via validators or in simpler terms “crypto-miners”. Imagine hundreds of thousands of transactions being verified every minute on Ethereum, this requires thousands of computers working together in a pool to verify each transaction, which makes the NFT minting process power-hungry.

According to a study by the NFT Club, adding any NFT to a blockchain uses about 83 kg of CO2. It’s not that. Once the NFT is mined, the carbon cost of each individual item of NFT continues. Each time a bid is submitted for an NFT, it costs 23 kg of CO2, each sale of an NFT produces 51 kg of CO2 and each transfer of an NFT produces 30 kg of CO2.

But all of that could go away if Ethereum switches from PoW to PoS. Rather than competing for a block, PoS uses a process where a miner is chosen at random. This makes PoS a more efficient method. Meanwhile, Ethereum-based NFTs that run on PoS will not only be environmentally friendly, but will also be a cheaper alternative.

“Trading and minting NFT on Ethereum should be cheaper due to sharding and proof-of-stake consensus algorithm. The ETH PoW consensus was causing major issues with transaction congestion and increased fees. With the merger, this will be discontinued, enabling multiple new opportunities in NFT markets as well as DeFi markets, including NFT lending and borrowing,” said Anshul Dhir, COO and co-founder of EasyFi Network, a DeFi platform. indianexpress.com.

LEAVE A REPLY

Please enter your comment!
Please enter your name here