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The Merge: Ethereum's ~99.95% energy cut
In September 2022, Ethereum transitioned from PoW to PoS in “The Merge” — the largest protocol migration in crypto history. Ethereum's energy consumption dropped from roughly ~78 TWh/year (comparable to a small country) to roughly ~0.01 TWh/year — a ~99.95% reduction. PoS secures the network with staked ETH rather than with hash power, so the energy footprint is essentially the validators' computers and the network. The Merge is the strongest evidence that PoW's energy use is not intrinsic to crypto — it's intrinsic to PoW specifically.
Ethereum’s electricity, before and after the Merge
Stranded energy: why miners chase power nobody else wants
Mining is uniquely price-sensitive to electricity (often 70%+ of operating cost), so miners locate wherever electricity is cheap or would otherwise be wasted:
- Excess hydro: seasonal overproduction in regions like Sichuan (China, pre-ban), Quebec, and Iceland.
- Stranded gas / flare gas: oil wells that would flare natural gas can instead run mining rigs, monetizing an otherwise wasted (and greenhouse-intense) resource. The carbon balance is contested: flaring methane is bad, but mining doesn't eliminate the underlying fossil extraction.
- Remote geothermal: wells too far from grid to monetize otherwise (El Salvador's state mining uses volcano geothermal).
- Grid balancing: miners can curtail on demand, acting as flexible load — a potential grid benefit, though this depends on local market design.
China was home to roughly half of Bitcoin's hash rate until the 2021 ban expelled miners; hash rate dropped, then recovered as operations relocated to the US, Kazakhstan, and elsewhere. The Mining unit covers the consensus mechanics; the Policy Timeline tracks the ban and the relocation chronologically.