Ethereum’s big software makeover has come to life on Thursday. The Ethereum Improvement Proposal 3354, or EIP-3554 for short might bring the current Ethereum’s mining protocols to an end.
For years now, Ethereum traders and enthusiasts were taking about the mining of Ether – the token associated with the Ethereum blockchain. They always argued that there should be an update, but the transition protocols have always represented a big risk.
“It’s a mechanism in Ethereum that makes it exponentially harder to mine,” said Tim Beiko, the coordinator for Ethereum’s protocol developers. “It’s like we’re artificially adding miners on the network, which raises the difficulty, making it harder for every other miner that’s on the network to actually mine a block.”
By December, Ethereum mining as we know it will come to an end.
Ethereum and Bitcoin as well as other cryptocurrencies are both get mind by mining pools and independent miners. This is how new coins enter the market, and the mining of these currencies play a major role in the crypto transactions fees as well as the price of the cryptocurrencies. Both currently use a so-called “proof-of-work” mining model. This model consists of machines solving complex math equations to create new coins. Consequently, the creation of these coins makes it impossible for any centralized body to create new coins arbitrarily.
In other words, this is what makes cryptocurrencies decentralized, and this is what makes more traders trust it.
“Proof-of-stake” instead of “proof-of-work”
Nonetheless, mining cryptocurrencies and creating blocks on the blochain requires a massive amount of energy to power the computers and mining GPUs. Since computers perform complicated calculations, it results in massive energy consumption. This has brought criticism about energy shortages and carbon emissions.
Meanwhile, the Ethereum community believes that it’s time to transition proof-of-work to “proof-of-stake”. The new model requires users to use existing cache of ether to verify transactions and mint new tokens. In return, the amount of new coins created will be limited without consuming that much of energy.