Ethereum significantly improves ESG rating to B score after Merge
PRESS RELEASE | Zug, Switzerland. Ethereum increases its ESG rating to B ("with potential"), the second-best grade on the rating scale, following the recent switch to the Proof of Stake protocol. The improvement is due to changes in the environmental category.
The merge of the Ethereum mainnet with the Beacon Chain proof-of-stake system was completed on 15 September 2022. Early calculations confirm that Ethereum's energy consumption will be reduced by at least 99 percent with the consecutive transition to Proof-of-Stake. Green Crypto Research (GCR) has therefore adjusted the ESG rating of the blockchain to a B on the rating scale. As a result, Ethereum is now considered a «sustainable blockchain with potential».
Improvement of Environmental score
The massive decrease in power consumption per transaction from around 300 kWh to less than 0.3 kWh marks the first improvement in the environmental score. The second relevant change stems from the upcoming reduction in electronic waste. Proof-of-work mining of Ethereum's own cryptocurrency Ether (ETH) was estimated to generate up to 16,000 tons of hardware waste annually. Thanks to the switch to Proof-of-Stake, this amount will now be reduced to less than 40 tons per year.
This improves Ethereum's environmental score from an original C-score to a B, raising the overall rating to a B ranking. In both the Social and Governance categories, the changes due to the Merge were minor and have not contributed to any changes in the ranking.
Minor changes in Social and Governance
The existing social score of B- remains. Ethereum will stay an infrastructure for decentralized applications without significant changes in the distribution of assets. For now, the change in protocols has no impact on transaction costs.
In the governance category, noteworthy changes include the improvement in diversification. With the merger, Ethereum became the most decentralized blockchain network within the ESG rating scale to date. The governance score remains at A- for the time being.
Rating Methodology GCR determines the sustainability of blockchains and crypto assets based on three sustainability categories: Environment, Social, and Governance (ESG). GCR collects up to 110 data points per crypto asset and incorporates them into quantitative rating models. Additional qualitative factors such as visions, roadmaps, or conflicts of interest are also taken into account. More on our rating approach: greencryptoresearch.com/methodology
About Green Crypto Research
Green Crypto Research (GCR) is a non-profit association based in Zug, Switzerland, that specializes in evaluating the sustainability of cryptocurrencies. The organization was founded in May 2021 and developed the world's first ESG rating for crypto assets. With that, GCR enables professional investors, asset managers, and crypto exchanges to offer sustainable crypto solutions to their clients.
Isabel Gehrer, President