“Every change represents an opportunity and a redistribution of wealth.”
After eight long years of waiting, we have finally witnessed this historic change achieved by Ethereum. At 6:43 on September 14, 2022 (UTC), as the Terminal Total Difficulty (TTD) reached 58,750,000,000T, the Merge was officially activated. After the mainnet was successfully merged with the Beacon Chain, PoW is now history, and the network has started a new PoS era.
Reactions to the Merge vary significantly. Unlike people who joined the YouTube live stream party hosted by the Ethereum Foundation or recorded this wonderful moment on SNS platforms like Twitter, Ethereum miners, concerned with their financial interests, are looking for the next mining destination.
For a long time, Ethereum brought huge returns to miners. According to TheBlock, in 2021, Ethereum miners recorded a stunning annual revenue of $18.96 billion. After deducting the electricity bill (about 33%) and the mining machine cost (about 10%), miners earned a profit of $10.8 billion. Attracted by the massive profit, people rushed to buy GPUs for ETH mining. According to the relevant hashrate statistics, during the PoW era, the ETH hashrate accounted for over 90% of all hashrates in GPU mining.
How should the massive hashrate be processed after Ethereum suspends PoW mining? In fact, before the Merge was completed, there have been two mainstream views: 1) ETH miners can transfer their hashrate to other PoW coins like ETC, which shares the same origin as ETH, and keep mining; 2) Miners should defend their rights and interests, so some miners chose to defend Ethereum on the PoW chain.
No matter which camp Ethereum miners side with, and regardless of how their hashrates are processed, market players will surely engage in fierce competition to grab the ETH hashrate. Ethermine, the world’s largest ETH pool, announced the suspension of its ETH mining business, which meant that 31% of the total ETH hashrate is now not used for mining. This shows us that the support of the Ethereum hard fork among mining pools also affects, more or less, the choice of ETH miners.
According to the announcements issued by mining pools, institutions including Ethermine, Binance Pool, ViaBTC, and BTC.com no longer support ETH PoW mining services, while pools such as F2Pool, AntPool, and Poolin still do.
That said, data from 2MINERS.COM shows that, as of September 20, the total ETHW hashrate stood at 31.6 TH/s only. On the day of the Merge, it grabbed about 68 TH/s of the ETH hashrate, but its hashrate is now trending downward. The figure peaked at only 79 TH/s on September 14. In contrast, the ETH hashrate before the Merge was approximately 810 TH/s, which indicates that most miners are not buying into the hard fork scheme led by Justin Sun and Hongcai Guo (known as Baoerye).
So, where did the 810 TH/s hashrate go on the day of the Merge? According to the relevant hashrate statistics, about 10% of the ETH hashrate went to ETHW, about 30 % went to ETC, and about 24% was absorbed by Ergo. In addition, coins like RVN, BTG, and Grin also attracted many ETH miners and recorded a significant hashrate growth on September 14. Furthermore, there are also GPU mining machines providing high-performance computation and rendering services for Web 3 middleware protocols.
The hashrate won by these cryptos during the Merge is, in fact, a sword of Damocles hanging over the project teams. This is the case because their original hashrate is negligible compared to the ETH hashrate, and the massive short-term inflow of hashrate makes these PoW coins more vulnerable to 51% attacks. Apart from security implications, as miners flock to the networks, there will be a drastic decrease in the mining revenue, and they could only maintain a balance through continued price growth.
However, the price of a crypto is determined by its supply and demand. As such, projects can only attract more buyers by enriching their ecosystems and showing investors the crypto’s future value. Only in this way can they drive up the crypto price and convince more miners to mine the crypto. That is a formidable challenge to the project teams.
To sum up, the Ethereum Merge represents a heaven-sent opportunity and a fresh challenge for investors, miners, and project teams. Let’s wait and see which PoW coin could grab the ETH hashrate and stand out as the final winner of the “game”.