If all goes according to plan, the so-called Merge will take place by the end of September, completing Ethereum’s transition from proof-of-work (PoW) consensus to proof-of-work. shares (PoS). This long-awaited Ethereum (ETH) event will force the mining industry of the estimated $19 billion network to find other ways to make money.
Pioneered by Bitcoin (BTC), mining is the process of verifying transactions and racing to solve complex math problems for the right to record transactions on the blockchain. In return for devoting time and resources to performing this task, the winning miners will receive a fixed amount of newly released coins. Consolidation will replace this process with staking, which requires less energy and computing power.
One option that is being applied to mining pools is to redirect their expensive and powerful dedicated computers to Ethereum Classic (ETC). This is a network fork that emerged from the 2016 hard fork, following a hack in which $60 million was stolen from one of the earliest decentralized autonomous organizations (DAOs) on the Ethereum network.
For most of its history, Ethereum Classic has had to operate in the shadow of Ethereum.
Challenges and opportunities
Miners are signaling various approaches to adapting to Ethereum post-Consolidation.
For example AntPool, the mining pool affiliated with mining giant Bitmain, last month announced that it has invested $10 million in development and application for Ethereum Classic, while Ethermine, the Ethereum mining pool The largest, announced the beta version of EtherMine Staking, a staking pool in preparation for post-merger mining.
Luxor Technology, a provider of bitcoin (BTC) mining software and services, has also invested in Ethereum mining, despite the imminent possibility of a change in the consensus mechanism.
“Despite varying levels of interest, the common ground is that there hasn’t been enough testing on the PoS transition,” said Ethan Vera, co-founder and CEO of Luxor. If the merger is successful, this is very worrying for those who have invested time and money in Ethereum.
There are billions of dollars at stake and the Ethereum Foundation, the nonprofit that oversees network development, is moving too fast in the transition to PoS, posing a huge risk to miners and holders. hold ETH, Vera added.
While Vera believes that Ethereum is best developed on PoW, if the transition to PoS is successful, his company will still be happy for the ecosystem and still support individuals as well as companies.
Hive Blockchain (HIVE) also shared their challenges with Ethereum in the post-Consolidation era. When asked if Ethereum Classic will become more valuable to miners in the post-consolidation era, Aydin Kilic, president and CEO of Hive said that “it will depend on the case.” usage of Ethereum Classic”.
“Currently, about 95% of projects exist on the Ethereum blockchain. If developers realize that a secure proof-of-work layer 1 blockchain is the best playground for their based projects, then we will see an increase in applications on the Ethereum Classic blockchain.”
So we have to consider whether Ethereum Classic will gain ground in a post-Consolidation world. Either way, miners want Ethereum to succeed, even though they seem to prefer it over PoW.