After several delays that frustrated cryptocurrency enthusiasts, the Ethereum blockchain, which is used by the digital currency ether, on Thursday underwent a major software update that drastically reduces the energy consumption required for mining, Reuters reported.

According to the Ethereum Foundation, the new mining system will consume 99.95% less energy, and the upgrade could give the world’s second-largest cryptocurrency a significant competitive advantage over Bitcoin.

“We believe this is an important moment that will lead to ether outperforming the overall cryptocurrency market for a while,” said Richard Asher, chief trading officer at BCB Group, a London-based cryptocurrency firm.

Most blockchains require huge amounts of energy during mining processes and have come under heavy criticism from environmental activists and some investors in recent years.

Before the software update, which crypto-enthusiasts dubbed “The Merger,” a single Ethereum transaction required as much energy as the average US household uses in a week.

Enthusiasm for fans of Ethereum, Bitcoin’s big rival

The Ethereum blockchain has now moved from a so-called “proof-of-work” system, where energy-intensive computers verify transactions by solving complex mathematical problems, to a “proof-of-stake” system, where verification is performed by individuals and companies.

“Happy start everyone,” wrote Ethereum creator Vitalik Buterin on Twitter. “This is an important moment for the Ethereum ecosystem,” he emphasized.

Created in 2013, the Ethereum blockchain is seen by its proponents as the foundation of the so-called “Web3,” a future version of the Internet in which crypto-technology and decentralized financial transactions will play a central role in all applications and commercial transactions.

Although “Web3” is still a dream, the Ethereum blockchain is the basis of several applications that have become increasingly popular in recent years, from DeFi (decentralized finance), to non-fungible NFT tokens, to so-called “smart contracts”. .

Less good news for the crypto market as a whole

Both Ether and Bitcoin have depreciated sharply over the past year as central banks began raising interest rates sharply to keep inflation under control, prompting many investors to abandon cryptocurrencies as a means of protecting their savings from soaring prices.

But the world’s second-largest cryptocurrency has closed in on bitcoin since the start of last year, cutting its market share sharply.

Bitcoin’s market dominance fell to 39.1% from a peak of 47.5% in mid-June, while Ether reached 20.5% from a previous share of 16%.

It may seem like these two cryptocurrencies are still a long way apart, but Ether has come a long way since last year: in January 2021, its share was only 10%, while Bitcoin had absolute market dominance with a 72% share.