After many delays, the Ethereum merge is now scheduled to come in September. The reception and the expectation of the merge are partly positive. But not everyone is convinced of the move to proof-of-stake. Some Ethereum miners could split off and form their own network through a hard fork. Is it likely that the Ethereum miners future go bleak?
What is the Ethereum Merge?
The Ethereum Merge intends to merge the Ethereum beacon chain with the mainnet. This will result in the final conversion of the main Ethereum network to the proof-of-stake consensus mechanism. This step had been planned for a long time. Extensive tests were carried out on the beacon chain and a network of validators (stakers) was set up.
For a long time, Ethereum only ran on the Proof-of-Work consensus mechanism. This made the network increasingly slow and inefficient in the past. With the change, Ethereum wants to become more efficient in transactions and thus more scalable overall. The merge is the most important step of the Ethereum 2.0 update.
What does the Ethereum Merge mean for Ethereum miners?
In the past, transactions validate using the proof-of-work consensus mechanism. This is the same mechanism as Bitcoin. The “work” that a miner does determines the number of transactions that he can validate. You can find out more about proof-of-work in this article.
This ensured that the miners, who have particularly high computing power, were able to validate many transactions and thus earn high rewards in the form of ether tokens. As rewards diminished and transactions became more difficult to validate, this “power” became increasingly concentrated in a few Ethereum miners. The switch to proof-of-stake means that these miners now have to reorient themselves.
What steps did Ethereum take against miners?
The Ethereum 2.0 update has been in the works for months now. Changing the consensus mechanism is the most important step in the update. It was clear to the developers of Ethereum from the start that the changeover would be difficult since powerful miners would be reluctant to voluntarily support the changeover.
Therefore, during the transition, Ethereum initiated certain steps to encourage the transition. This included the so-called “Difficult Bomb”, which has made mining at Ethereum technically much more difficult than before in recent months. For example, many miners have been “forced” to adapt to Proof-of-Stake in recent months.
What happens to an Ethereum miner?
Theoretically, the Ethereum miners have few options after the changeover. After the merge, these are theoretically without work. The miners therefore are benefiting from the fact that the changeover had been massive delays in the last few weeks and months. This is how some miners were able to adapt. There is still a possibility that these can become validators for the staking process. Because they usually have many ether tokens.
Another possibility is a fork carried out by frustrated miners. Ethereum Classic is also a network that previously split off from the Ethereum Mainnet. There is a small possibility that frustrated miners will organize and force an Ethereum fork .
Is Ethereum safe to Invest in?
There is still a lot of uncertainty at the moment. In the last few weeks, we saw Ether prices surge from $1,000 to as high as $2,000. But in the last few days, we have seen sharp falls in prices again back to $1,500 with lower targets. The uncertainty about the smooth process of the Ethereum merger caused stronger sales of the Ether token. This drop was further exploited due to the negative market sentiment in the crypto market.
An investment in Ethereum is more of an opportunity than a risk. Because even with short-term losses, Ether should rise again massively over the next few months, at the latest in the next bull market. But even directly after the merger, there is the possibility of higher price gains.
