Jamie McNeill
Ethereum miners are not happy with the merge
Ethereum miners have not been pleased recently with many of the actions of their founder, Vitalik Buterin.
Firstly, Buterin’s introduction of EIP-1559, which purports to burn a much larger percentage of transaction fees in order to improve the tokenomics of Ethereum and make the blockchain more deflationary, was a highly contentious thing to introduce.
The miners were not happy that one of their main sources of revenue was being tampered with in such a way.
It is clear to see why the miners would be so upset, given that the rising popularity of Ethereum has meant that transactions on the blockchain are now extremely expensive, and miners had become accustomed to generating far more revenue than they would have done otherwise.
Unlike with Bitcoin, where the overwhelming majority of revenue that miners make come from mining new Bitcoin rather than transaction fees, Ethereum miners make a significant amount of their profits from transaction fees.
In February of 2021, this percentage reached an all-time high of over 50%, but has been in decline since then.
The move from Proof of Work to Proof of Stake means that Ethereum miners will no longer be able to participate in Ethereum and will have to find something else to mine instead.
Ergo’s popularity rises amongst miners
Assuming that miners don’t decide to completely shut down their operations, many will be looking for new blockchains to mine. Some of the most popular options are Ergo, Flux, Raven Coin, and Ethereum Classic.
As a Turing complete blockchain, Ergo runs using Proof of Work and currently has a market cap of around $280m.
One of the reasons that so many miners are so keen on exploring mining Ergo is due to the ease with which ERG can be mined: it is mined using GPUs, just like Ethereum, and there are a range of mining pools that one can join if they wish to mine with more consistency.
Another reason why people are so interested in mining Ergo is because of the relatively low market cap: miners can opt to preemptively choose to mine projects like Ergo in the hope that they will dramatically appreciate in the coming years – there is certainly more room for growth in Ergo than in a project like Ethereum, which has a market cap approximately 1,000x the size.
If more miners come to mine on Ergo, then the blockchain will become far more stable and secure. This means that the Ergo blockchain becomes a more desirable asset to hold, and the price ought to react accordingly.
In the last 30 days, this popularity has been showcased by a 125% rise in the price of ERGO.
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This article was written for Business 2 Community by Jamie McNeill.
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