The new system will use 99.95 per cent less energy, according to the Ethereum Foundation. To its proponents, the upgrade represents a major advantage as Ethereum seeks to surpass rival blockchain bitcoin.

Most blockchains devour large amounts of energy and have come under fire from environmentalists and some investors. Before the software upgrade, which is known as Merge, a single transaction on Ethereum used as much power as an average United States household uses in a week, according to researcher Digiconomist.

The overhaul has changed how transactions on the Ethereum blockchain occur and how ether tokens, the second largest crypto coin after bitcoin, are created.

Ethereum has moved from a “proof of work” system, in which energy hungry computers validate transactions by solving complex maths problems, to a “proof of stake” system, where individuals and companies act as validators, using their ether as collateral, to win newly created tokens.

“Happy merge all,” inventor Vitalik Buterin said in a tweet. “This is a big moment for the Ethereum ecosystem.”

The cryptocurrency ether was little changed at $1,633 as of 07:13 GMT.