Consensus at a Turning Point: Analyzing Ethereum’s 2022 Migration From PoW to PoS

The development of blockchain consensus mechanisms has put sustainability, scalability, and efficiency first in the list of cryptocurrency studies. As Bitcoin still uses the energy-intensive Proof-of-Work (PoW) algorithm, Ethereum is in the process of switching from PoW to Proof-of-Stake (PoS) with the Ethereum Merge in September 2022. The cause of this change was the rising energy prices, bottlenecks in scalability, and increased concerns among the global population regarding the environmental effects of PoW-based mining. Our study provides a rationale for the Ethereum transition by comparing and contrasting the volume of transactions, network performance through hash rate, and electricity consumption of Bitcoin and Ethereum in their PoW stages. With the help of both historical trend and predictive modelling in the form of the ARIMA framework, the obtained results showed that Bitcoin and Ethereum had different dynamics of growth under PoW, which was increased hash and energy expenditures but limited throughput. The ARIMA-based analysis achieved a mean absolute error (MAE) of 27.76, a root mean square error (RMSE) of 31.16, and a mean absolute percentage error (MAPE) of 26.08, which provided an overall forecast accuracy of 73.9%. These measures show that there is a medium predictive reliability, and volatility is mainly caused by sudden changes in mining intensity and market forces. The predictions further indicated that under PoW, Ethereum would have experienced a steep rise in operational energy consumption and congestion of its network transactions, which would have weakened network sustainability. Results thus confirm that the switch of Ethereum to PoS was not only an environmental need but also a strategic optimization of a transaction to scale higher, operational overhead reduction, and alignment with sustainable and ESG (Environmental, Social, and Governance) goals on a global scale. This piece leads to a better comprehension of the trade-offs between PoW and PoS, as well as the Ethereum consensus shift as the turning point in the evolution of blockchains establishing a precedent of other cryptocurrencies that can select a balance between performance, security, and sustainability.