The Ethereum network successfully transitioned from proof-of-work (PoW) to proof-of-stake (PoS) in September 2020, with the Merge. This was celebrated as a greenification of Ethereum, as it reduced energy consumption. However, former Ethereum core developer Lane Rettig has mixed feelings about the upgrade, and argues that the claims of it being less wasteful, more secure and increasing profitability are not true.
Strictly speaking, it is true that Ethereum’s energy consumption fell after the Merge, but what matters to humanity is total energy consumption, Rettig explains. He points out that the GPUs used to mine Ethereum didn’t disappear overnight, and many are still consuming a lot of energy. Additionally, there are now nearly 700,000 validators running on the Ethereum proof-of-stake Beacon Chain, which consume bandwidth, energy and terabytes of disk storage.
Rettig also argues that proof-of-stake is not more secure than proof-of-work. He explains that a cartel controlling more than half of the stake can silently, invisibly, and permanently capture the entire network, and that it is easier to attack a PoS chain because it doesn’t require scarce assets like hardware or electricity.
Finally, Rettig argues that the market for maximal extractable value (MEV) has exploded in the wake of the Merge, and that MEV allows sophisticated actors to capitalize on arbitrage opportunities. He concludes that looking strictly at energy consumed by miners is short-sighted, and that one must consider the total social cost of operating a network.
Quotes: Strictly speaking, it is true that Ethereum’s energy consumption fell after the Merge, but what matters to humanity is total energy consumption, and In other words, claiming a 99.5% energy reduction is accounting sleight of hand.