Jamie McNeill
The Ethereum Merge is now complete meaning the blockchain now runs on a Proof-of-Stake rather than Proof-of-Work consensus mechanism – but will that leave ETH miners turning to Bitcoin, which also runs on PoW?
The transition has been planned almost since Ethereum’s inception and was originally scheduled to take place a few years ago but, due to a series of delays, the updates were set back.
Now, with Ethereum miners no longer able to mine ETH it could lead many to pursue different things instead, with the likes of Ethereum Classic and Ravencoin already seeing increased mining activity.
Ethereum miners forced to stop mining or mine other chains
The Merge was successfully completed on Thursday morning and the transition has meant that Ethereum no longer depends on miners to keep the network secure – rather than the hash rate being something that Ethereum depends on for security, Ethereum’s security is now based on the stakeholders in the system.
And we finalized!
Happy merge all. This is a big moment for the Ethereum ecosystem. Everyone who helped make the merge happen should feel very proud today.
— vitalik.eth (@VitalikButerin) September 15, 2022
Among the Bitcoin community, changing the security parameters of the network is an extremely popular thing to do, but the Ethereum community has always been more ideologically flexible.
Given that Ethereum can no longer be mined, miners are now being faced with a choice – either cease operations, and potentially lose a huge source of income, or find an alternative asset to mine.
One of the most popular alternatives so far has been Ethereum Classic (ETC), which is seeing a huge rise in hash rate. Over the past few 24 hours the hash rate of ETC has risen from under 50 TH/s to over 125 TH/s and shows no signs of slowing down.
Ethereum miners can’t just switch to mining Bitcoin
Ethereum miners cannot just switch to mining Bitcoin, however, because the way that the two blockchains operated under a PoW consensus was still different. Bitcoin was mined with ASICs, whereas Ethereum was mined with GPUs.
There are a variety of reasons for this, including that mining with a GPU is less capital intensive and therefore more easily distributed. It will be possible for ETH miners to switch but it will come at some expense.
Unexpected effects of the Merge
As ever with large changes made at a foundational level, there are to be unintended and expected consequences.
On Wednesday, interest rates for lending on Aave briefly shot up to over 70% as people sought to position themselves well to ensure that they received airdrops from hard forks.
The founder of Aave, Stani Kulechov, also joked that gamers will now be able to find affordable graphics cards since the financial incentive of buying lots of graphics cards to mine is no longer so strong.
Finally will be able to buy a decent graphics card for gaming
— stani.lens (,) (@StaniKulechov) September 15, 2022
There is currently a shortage of semiconductor chips around the world due to supply chain problems after the coronavirus pandemic. Not only that, but the growing geopolitical tensions around Taiwan have caused further uncertainty in the semiconductor chip market.
The small role that Ethereum mining had to play in this may now be reduced somewhat. Kulechov will likely have been speaking tongue-in-cheek, given that it is likely most miners will gravitate to other coins rather than stop altogether, but there is some hope for gamers.
Share in mining revenues with Copium
Copium offers a solution for those who wish to invest in the mining industry in a decentralised way. The team at Copium has an existing Bitcoin mining set up in New Zealand and is fundraising through their presale in order to raise capital to expand their operations.
Those who hold Copium Coin will be entitled to share in profits generated from mining revenues. This will be reflected in the token price of Copium, since profits will be funneled into buying back and burning the token.
What’s next for Ethereum?
As the old mantra goes, people are keen to ‘buy the rumour and sell the news’, and that certainly appears to have been the case with Ethereum thus far, whose price has been falling over the course of the past few days.
Now that the merge is complete, which was the most important thing on the Ethereum roadmap, there are a few final things that Ethereum still needs to complete. Notably, Ethereum’s upcoming Shanghai update in 2023 will open the withdrawal queue for people who have ETH staked in the deposit contract.
The update will start a withdrawal queue, and Nansen estimates that the ETH in the contract will be gradually withdrawn over the course of the coming year.
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This article was written for Business 2 Community by Jamie McNeill.
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