Why Ethereum is switching to proof of stake and how it will work

Right now the world is facing a power crunch, which is partly why China banned crypto mining last year, and why countries like Kosovo and Kazakhstan, where the miners scattered off to, are pushing miners out and cutting off their electricity. These countries need the power to keep their businesses running and their homes warm.

Not only does proof of work waste electricity, it generates electronic waste as well. Specialized computer servers used for crypto mining often become obsolete in 1.5 years, and they end up in landfills.

Ethereum’s mechanism has other drawbacks—it’s tediously slow, averaging 15 transactions per second. And it doesn’t scale. CryptoKitties, a game where players breed and trade cartoon cats, caused a transaction pileup on the network in 2017.

With all the money venture capital firms are shoveling into Web3—a futuristic model where apps will all run on decentralized blockchains, much of it powered by Ethereum itself—now is a good time for Ethereum to disassociate from proof-of-work mining. And that’s the game plan.

Sometime in the first half of 2022, in a dramatic event termed “The Merge,” Ethereum plans to transition its entire network to a different consensus mechanism: proof of stake, which it promises will use 99% less energy, allow the network to scale, and potentially help it reach 100,000 transactions per second.

Of course, Ethereum’s move to proof of stake has been six months away for years now. “[We thought] it would take one year to [implement] POS … but it actually [has] taken around six years,” Ethereum’s founder, Vitalik Buterin, told Fortune in May 2021. That’s because building such a model is complex.