You may have heard that the Ethereum merge is happening soon. This is a big deal in the crypto space, as the number two cryptocurrency on earth is undergoing a massive transition. You may not know that certain folks are about to become collateral damage in this process.
What is the Ethereum Merge?
Ethereum is currently two separate networks – ETH 1.0 and ETH 2.0. They are in the process of slowly merging these two networks together, which will result in some major changes. One of the most notable changes is that staking will become a primary form of security on the Ethereum network.
What are the benefits of Ethereum 2.0
Ethereum 2.0 is designed to be a more scalable and secure network than its predecessor. By switching to the proof of stake algorithm, Eth will be able to process many more transactions per second than it can currently. This is a big deal for a network that is already struggling with transaction congestion and high fees. Additionally, there has been an outcry of late by crypto naysayers against proof of work (traditional “mining”) algorithms, as they are seen as environmentally unfriendly — this move to proof of stake will effectively take this concern out of the equation for Ethereum.
So, all good right?
For the average reader of this blog, absolutely… but there is one subset of crypto enthusiasts that are not happy about the Ethereum merge. Can you guess who they are?
If you guessed “miners”, you would be correct!
What’s the problem with miners?
The Ethereum network is currently secured by a proof of work algorithm. This means that people who want to validate transactions on the network (i.e. miners) need to put in significant amounts of computing power to do so. In return, they are rewarded with ETH for their efforts.
The merge to 2.0 effectively eliminated Ethereum mining, as the network will now be secured by stakers (people who are holding ETH in their wallets). This means that miners will no longer be able to profit from transaction fees on the network.
What does this mean for miners?
In short, it means that a lot of people are about to go out of business. There are plenty of mining companies that make the majority of their revenue from Ethereum mining. With the merger, this revenue stream will dry up, potentially putting them out of business.
The miners are launching a final defense.
With the merger just days away (or complete if you are reading this after September 15), the miners have one last card to play. Many of the largest mining operations have proclaimed that they will immediately fork Ethereum 2.0 into a new coin called “ETHPoW”. This new coin will continue where Ethereum 1.0 left off and contain all the previous transaction history — meaning that it will be fully compatible with all the existing infrastructure built on Ethereum.
ETC Group’s new Ethereum ETP will rely on a forked PoW Ethereum chain, representing a group of miners opposing Ethereum’s switch to PoS. The PoW chain will have a new token called ETHW, which will provide a basis for ETC Group#crypto #NFTs #GameFi #CryptoNews #ETH #Dapps #ethw pic.twitter.com/Q8JNfcxG2H
— ETHW News (@ETHWNews) September 7, 2022
The miners are effectively trying to “save” Ethereum by forking it into a new coin that they control. They are hoping that people will flock to this new coin in droves, as it will provide them with an opportunity to keep mining and profiting. While nobody is expecting ETHPoW to compete with Ethereum, if the miners can drum up enough interest, it could become a viable altcoin to mine.
What does this mean for Ethereum?
In the short term, not much. The miners are fighting a losing battle here and ETH 2.0 will go ahead as planned. However, in the long term, this could be a problem for Ethereum. If ETHPoW becomes popular enough, it could siphon off some of Ethereum’s users and developers. This could lead to a split in the community and, eventually, two competing versions of Ethereum. We’ve seen this before with Ethereum classic, although that was for different reasons.
Reminiscent of the old west
Remember the photos from the aftermath of the gold rush? Empty provisioner shops, pickaxes everywhere, and tumbleweeds blowing through the streets? Is this the fate of miners in the crypto space? Only time will tell.
What do you think about the Ethereum merge? Let us know in the comments below!