Ethereum is Killing Mining For Good With “The Merge”

The long-awaited Ethereum (ETH) Merge is set to take place this week as the network transitions from a proof-of-work (PoW) blockchain to a more energy-efficient proof-of-stake (PoS) system, effectively ending ETH mining and diverting a large portion of investors toward Bitcoin.

The Merge is expected to reduce Ethereum’s energy consumption by 99.95 percent, which is good for the network’s long-term viability and security. The switchover is scheduled for later today or early Thursday, international media reported late on Tuesday night.

Our channel checks have confirmed that the switchover is already being carried out by systems integrated with the Ethereum network. Anyone searching for the Merge on Google will see a countdown tool that predicts completion in the early hours of Thursday GMT.

While the Merge has been part of Ethereum’s plan since its inception in 2014, according to co-founder Vitalik Buterin, it had to be postponed numerous times due to its technical ‘richness’. But what exactly is it aimed to do?

About The Merge

Up till now, the Ethereum blockchain has always been updated, verified, and maintained by worldwide webwork of volunteers equipped with powerful computers who support the system through a process known as crypto-mining. This system is known as Proof of Work, and it is used by many of the most popular blockchains including Bitcoin and Dogecoin.

The Ethereum Proof of Work blockchain will merge with a carbon copy called the Beacon Chain, which has been running on a new system called Proof of Stake since 2020.

Proof of Stake drastically reduces the number of computers required to maintain the blockchain, and crypto miners are replaced by “validators” who stake their own stash of ETH coins against their work. If they make a mistake, they will simply lose it all. This process essentially reduces the number of coins given out as a reward, as well as the overall number of coins in existence, in addition to reducing Ethereum’s energy burden.

Going Green

The merge will not only reduce the number of computers required but also minimize the computing power needed.

Ordinary laptops and desktop computers will now be used in place of expensive mining rigs with powerful GPUs (graphics processing units) which were traditionally used to mine ETH.

Because mining is decentralized, it is difficult to get an accurate picture of how much energy is being used globally, but according to Digiconomist, Ethereum’s decentralized network consumes as much electrical energy as Chile in a single year and has a carbon footprint comparable to the entire city of Hong Kong. In this context, research suggests switching to Proof of Stake will reduce energy consumption from around 112 Terawatt hours per year to 0.01 Terawatt hours per year.

What The Merge Means for Crypto Miners

Although Ethereum dominates overall NFT trading volume and is home to the majority of the highest-value projects, rival platforms such as Solana and Flow consume significantly less energy.

Keeping in view the economic and energy trends impacting the world today, crypto miners are threatened by a reduction in potential profits from mining their favorite coins.

After the Merge, market sentiments suggest a big chunk of miners will spend thousands (read: millions) to replace their Ethereum GPU mining computers with state-of-the-art and energy-intensive machines capable of mining Bitcoin.

Effect on GPU Shortage

Last year, finding a graphics card in stock was nearly impossible due to the semiconductor chip shortage and the crypto craze. This meant that graphics cards were in very low supply (compared to demand) making them extremely expensive and difficult to find at their original prices.

A year later, after a blood-curdling market crash that wiped out billions in virtual currency investments, the GPU shortage is over, and the problem of ‘excess inventory’ may soon come knocking on our doors.

Whether you’re ready or not, Ethereum’s long-awaited Merger has arrived. But, is there any chance of something going horribly wrong? Let us know in the comment section below.