Ali Raza
The mining hash rate for Ethereum Classic has been on an uptrend since the successful completion of the Ethereum Merge. However, given the poor liquidity of ETC on centralized exchanges, miners could face costly problems when cashing out.
Miners run into costly issues selling mined ETC
Ethereum Classic is one of the first hardforks of the Ethereum network. The transition of Ethereum to proof-of-stake removed miners from Ethereum, and they have looked for alternative networks that still rely on the proof-of-work consensus mechanism, among them, Ethereum Classic.
However, miners face significant issues when mining on Ethereum Classic. Ethereum Classic launched in 2016 but has failed to gain a large market share or usage. ETC has been down by 23% over the past week, and its liquidity on centralized exchanges is not very good. This situation could pose issues for new miners that want to cash out.
A report by Kaiko estimates that Ethereum Classic miners that sell ETC on the spot market will deal with a 5x more slippage if they make a $100K market sell order for ETC compared to if they sell Ether. This additional cost adds to the problems that former Ethereum miners will face as they struggle to sustain profitability.
Hours after the Merge, the Ethereum Classic mining hash rate soared to an all-time high of 311.81 terahashes per second. However, it has since dropped to 198.06 terahashes per second.
Crypto markets post Merge
The Merge was expected to create a positive week for Ether’s price. However, the event was followed by a massive selloff, with Ether dropping by over 20% on the week. However, ETH crypto staking activities have remained active.
The discount on staked Ether tokens relative to spot ETH has also dropped to the lowest levels since May this year, in a trend that emerged hours after the Merge went live. Lido’s stETH witnessed a sharp narrowing of its discount from 4% to around 1%. The narrowing discount was enabled by a rise in liquidity in the Curve stETH pool, which ranks as the largest secondary market for staked ETH.
After the Merge, there was also high buying pressure for Coinbase’s cbETH and Binance’s bETH markets. According to Kaiko, the trend signifies a drop in the risk premium, with the staked ETH discount expected to persist until the Shanghai upgrade that will allow the withdrawal of staked Ether.
Besides ETH and ETC, the other token that has also had an eventful week is Ethereum Proof-of-Work. The ETHW fork started on a rocky start after some technical issues. The token has plunged by 76% on the week. The performance of ETHW has also been affected by the launch of another Ethereum fork named EthereumFair.
Like ETHW, EthereumFair is also a fork that plans to continue supporting miners that were kicked out of Ethereum after the Merge. EthereumFair has received support from the Poloniex exchange and has gained by double-digits over the past 24 hours.
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This article was written for Business 2 Community by Ali Raza.
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