Ethereum has long been one of the most important blockchains in the world, powering decentralized finance (DeFi), NFT marketplaces, and thousands of smart contracts. However, it has also faced criticism over its high energy usage until recently. In September 2022, Ethereum completed a long-awaited upgrade known as The Merge, switching from the energy-intensive Proof of Work (PoW) model to the far more efficient Proof of Stake (PoS) consensus mechanism.
PoW to PoS: What changed?
Before the Merge, Ethereum required massive computational power to validate transactions and secure the network. After the upgrade, validators are now selected based on the amount of ETH they stake, cutting the need for mining entirely. This resulted in a staggering 99.95% reduction in energy consumption, according to the Ethereum Foundation.
From an environmental standpoint, Ethereum is now significantly greener, rivaling even some traditional payment networks in terms of carbon footprint. This transition has opened the door to greater adoption among eco-conscious investors and institutions that previously avoided cryptocurrencies due to concerns about sustainability.
But the Merge brought more than just lower energy costs. It also laid the groundwork for future scalability upgrades, including sharding, which could reduce network congestion and fees. For traders, this means Ethereum is becoming more efficient, sustainable, and potentially more attractive.
However, it’s worth noting that since The Merge, Ethereum has underperformed Bitcoin. The ETH/BTC ratio has dropped significantly, from around 0.08 in September 2022 to approximately 0.022 in mid-2025. This decline suggests that, despite its technological improvements, Ethereum has struggled to maintain its market share relative to Bitcoin, possibly due to macroeconomic trends or shifting investor preferences.
Curious about how Ethereum’s evolution will affect its market performance?
