The Merge – Ethereum's transition to POS, and what is the future of POW miners
📌Summary
1. What is The Merge?
ㅡ The Merge is an upgrade that will switch Ethereum consensus from proof-of-work (POW) to proof-of-stake (POS).
2. The Advantages of The Merge
1) Decrease in Inflation - "The Triple Halving," 4.3% $ETH inflation now -> inflation is expected to fall by 0.3-0.4%
2) Increased Energy Efficiency – environmentally friendly mining, 99.95% reduction in energy consumption is expected
3) Increased Security - 51% attack cost will increase, Vitalik promises continuous security improvements
3. The Merge - Expected Impacts
ㅡ What are Ethash (Ethereum POW Algorithm) miners' survival options?
1) Mainstream opinion: POW miners should relocate to another POW project, mainly $ETC.
- Hash rate would be roughly 45 times higher if all Ethash miners transfer to ETChash (Ethereum Classic POW Algorithm).
- Ethereum Classic will welcome them with open arms. However, from miners' perspective, Profitability will be reduced by 45 times. based on the current price of $ETC (3/29 - 58,000 KRW), electricity bills for mining cannot be made.
- Miners have to choose once again.
A. If ETC is selected - i) they should develop the $ETC ecosystem (DeFi, NFT, payments, etc.) to increase the usability and price, or ii) artificially pump prices to meet the mining unit price.
B. If another alternative is selected - the choices from "A" must be made again. Alternatives may include GPU mining coins ($RVN, $BTG, …).
2) Minority opinion: before the switch to POS, maintain the Ethereum POW chain via a hard fork.
- There’s a strong possibility that exchanges will support only those chains that upgraded to POS through The Merge.
- It will be placed on its own minority fork, and the economic value of block compensation will be much lower than operating costs. Ethmerge claims that moving to another chain will be more economical.
4. Conclusion
is included in tweet thread...
📌Summary
1. What is The Merge?
ㅡ The Merge is an upgrade that will switch Ethereum consensus from proof-of-work (POW) to proof-of-stake (POS).
2. The Advantages of The Merge
1) Decrease in Inflation - "The Triple Halving," 4.3% $ETH inflation now -> inflation is expected to fall by 0.3-0.4%
2) Increased Energy Efficiency – environmentally friendly mining, 99.95% reduction in energy consumption is expected
3) Increased Security - 51% attack cost will increase, Vitalik promises continuous security improvements
3. The Merge - Expected Impacts
ㅡ What are Ethash (Ethereum POW Algorithm) miners' survival options?
1) Mainstream opinion: POW miners should relocate to another POW project, mainly $ETC.
- Hash rate would be roughly 45 times higher if all Ethash miners transfer to ETChash (Ethereum Classic POW Algorithm).
- Ethereum Classic will welcome them with open arms. However, from miners' perspective, Profitability will be reduced by 45 times. based on the current price of $ETC (3/29 - 58,000 KRW), electricity bills for mining cannot be made.
- Miners have to choose once again.
A. If ETC is selected - i) they should develop the $ETC ecosystem (DeFi, NFT, payments, etc.) to increase the usability and price, or ii) artificially pump prices to meet the mining unit price.
B. If another alternative is selected - the choices from "A" must be made again. Alternatives may include GPU mining coins ($RVN, $BTG, …).
2) Minority opinion: before the switch to POS, maintain the Ethereum POW chain via a hard fork.
- There’s a strong possibility that exchanges will support only those chains that upgraded to POS through The Merge.
- It will be placed on its own minority fork, and the economic value of block compensation will be much lower than operating costs. Ethmerge claims that moving to another chain will be more economical.
4. Conclusion
is included in tweet thread...
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The Merge – Ethereum's transition to POS and the future of POW miners 📌Summary Simple story is following 👇