How Green and Decentralised is Ethereum Post Merge?
From block 15,537,393 on September 15th 2022 (when the Total Terminal Difficulty was hit) all Ethereum blocks have been created by validators staking their ether as opposed to miners in a hashrate competition to solve a cryptographic puzzle 🐼🚀.
It was reported that this would reduce Ethereum’s environmental impact by over 99%, reduce the daily security requirements on the network from ~13,500 ETH to ~2,000 ETH and ensure that the network was prepped for upcoming scalability boosts. Now we’re almost a month post-merge, let’s dig into whether the green credentials have held and what the state of decentralisation looks like…
🥬Assessing the green impact
Pre-Merge, Ethereum’s energy use was ~23m MWh/year and extensive study by the Crypto Carbon Rating Institute ( CCRI) has put post-merge energy use at just ~3k MWh/year — a whopping 99.988% reduction!
This is a huge ✅to the headline ambition of reducing the network’s energy consumption by >99%. In fact, Vitalik even re-tweeted that the Merge had reduced global energy consumption by 0.2%!
However it’s worth considering that a proportion of Ethereum’s hashrate migrated to other PoW blockchains in order to continue making the most out of their mining rigs. This means that whilst Ethereum’s energy consumption has gone down, other network’s have seen a rise:
- Ethereum Classic’s hashrate (the chain which accepted a post 2016 DAO hack consequence) jumped to a max of over 400%, and is now settling around 135 TH/s from the pre-merge 44 TH/s
- Ravencoin’s hashrate jumped from < 3TH/s to now hovering ~15TH/s.
- In addition, the creation of EthereumPoW — the continue proof of work version of Ethereum post-merge, has seen around 55TH/s on the network.
It could be extrapolated from this that whilst Ethereum saw a >99% hashrate reduction, actually ~158 TH/s of this simply moved to other PoW chains. However this isn’t all doom and gloom, that’s still a ~84% hashrate reduction overall post-merge. It’s also worth considering that these miners will only continue mining ETC, RVN and ETHW whilst cost<rewards, so if prices materially drop or electricity prices increase then they may decide to sell their minings rigs and become validators instead.
🏘️ Assessing the centralisation impact
There are currently 439,480 validators, staking a combined total of 14,063,239 ETH (~$18.2billion). When we look over the last 24 hour period (pulling data super manually across 71 pages from https://beaconcha.in/blocks 😅) you can see that 3 accounts have been responsible for processing over 51% of the blocks.
This is unsurprising as it mirrors the pool distribution where the top 3 pools (Lido, Coinbase and Kraken) account for over 51% of pooled ether.
However before too many concerns about centralisation kick in, it’s worth comparing this to pre-Merge Ethereum where the top 3 mining pools (Ethermine, F2Pool and HiveonPool) accounted for ~54% of the hashrate:
Then let’s compare current ETH block processing distribution with ETC, ETHW and BTC over the last 24hrs:
- 42 miners have processed at least one block for Ethereum Classic. Bitfinex leads this with 19.5% of the blocks, and the top 4 account for ~56% of the blocks.
- 35 miners have processed at least one block for EthereumPoW. However just 2 miners account for more than 50% of the blocks processed, with the top miner 2Miners accounting for ~34%.
Fun fact: the 9th biggest miner on the chain is a Trust Trading Scam called eth.altpool.pro
- The top 3 BTC block producers over the last 24hours (F2Pool, Binance and AntPool) accounted for ~53% of the blocks mined over the last 24hours.
As such whilst it’s true that just 3 accounts have processed over 50% of Ethereum blocks in the last 24hours, this is the same for Bitcoin with the top 3 miners and even worse on EthereumPoW with just 2 miners accounting for >50% of blocks in the last day. Surprisingly Ethereum Classic has fared the best with the top 3 block producers accounting for less than 50% of blocks.
Therefore whilst discussions around centralisation in a post-merge world are very important to have and early indications are showing that 28% of Ethereum blocks are following OFAC censorship rules ( https://www.mevwatch.info/), from my research it appears that the level of centralisation for block creation post-Merge is not materially better or worse than a pre-merge world or BTC, ETC or ETHW.
Originally published at https://www.linkedin.com.
