What Will Happen To Miners When The Ethereum ‘Merge’ Turns Mining Into Staking

YEREVAN (CoinChapter.com) — The long-awaited Ethereum “Merge” is around the corner. The final transition from a Proof-of-work (PoW) consensus mechanism to a proof-of-stake (PoS) mechanism will occur in September.

Against this backdrop, everyone wonders what will happen to miners when the transition occurs. 

The final date for the Ethereum Merge announced 

The Ethereum Foundation has confirmed that the Merge event will occur in two stages. The Bellatrix network upgrade, which is the first stage, is scheduled for September 6. 

The Paris upgrade will follow Bellatrix, which will finalize the transition from proof-of-work to proof-of-stake. According to the organization, the Paris Stage is scheduled between September 10 and 20, 2022.

“Following years of hard work, Ethereum’s proof-of-stake upgrade is finally here! The successful upgrade of all public testnets is now complete, and The Merge has been scheduled for the Ethereum mainnet,”

the Ethereum Foundation announced. 

The Ethereum Merge will upgrade the network to Ethereum 2.0. As CoinChapter earlier reported, the transition will make the network more productive. In addition, it will lower Ethereum’s energy consumption while reducing the high transaction (gas) fees.  

What will happen to miners after Ethereum Merge?

Under the current Proof of Work (PoW) system, miners generate (mine) new ETH tokens by validating transactions on the network. For this, they use large computing power to operate their mining rigs. They are rewarded with Ethereum (ETH) in exchange for their work. 

However, once the Merge upgrade is complete, the community will validate transactions by staking their existing ETH tokens (hence the term proof of stake). So how will the Ethereum Merge impact miners? 

Several global ETH miners have invested tens of thousands of dollars on expensive equipment they use to mine ETH. According to Messari, Ethereum Mining generated nearly $19 billion in 2021. 

However, the Merge upgrade threatens to deprive them of their income and render their gadgets useless.

“If you are mining on the Ethereum mainnet, you should be aware that the network will operate entirely under proof-of-stake after The Merge. At that point, mining will no longer be possible on the network,” 

the Ethereum Foundation announced earlier this week. 

As CoinChaapter earlier reported, there is a Civil War brewing within the community. One group, unhappy with the shift to POS and wanting to have a POW version of the Ethereum network, is now advocating for a new fork in the network. 

Influential Chinese miner Chandler Guo, who leads the group, threatened to enforce another hard fork of the network. 

Recommended: Ethereum (ETH) conquers $1.7K ahead of the Merge – what to expect?

Ethereum Classic continues to benefit 

In another scenario, many miners are expected to shift to Ethereum Classic (ETC).   

Ethereum Classic (ETC) was formed after a major hack in 2016 ($50 million) resulted in a hard fork of the Ethereum (ETH) chain. ETC (the original PoW Ethereum network) currently holds the 19th spot, having a market cap of nearly $5 billion, according to CoinMarketCap.

Earlier this year, AntPool, an affiliate of mining rig giant Bitmain, announced a $10 million investment to support the Ethereum Classic ecosystem. 

Over the recent weeks, Ethereum Classic’s price has soared. In July, the token traded for as low as $14. Since talk of the “Merge,” ETC rallied to cross the $45 mark in August. 

However, as market analysts from CoinChapter suggest, the token is poised to reach the $50 mark in the coming days. 

However, unlike Ethereum, ETC does not have a robust ecosystem. With the token unlikely to reach ETH levels, whether mining Ethereum Classic will be profitable for the miners remains a question. 

Miners have other options as well. For example, some of them could shift to altcoins, such as Ravencoin (RVN), Ergo (ERG), and Cortex (CTXC), all of which have done fairly well in recent weeks.

Meanwhile, the direction many of these miners will go depends on their equipment. While ASICs are application-specific, GPUs are more flexible and adaptable. 

With the Ethereum merge knocking on our doors, it won’t be long before we find out what happens to the Ethereum miners.