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Tuesday, November 29, 2022
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Ethereum Merge Shifts Crypto to New PoS System


Ethereum (ETH) cryptocurrency coin | Image by Shutterstock

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Early Thursday morning, over “41,000 people were tuned in on YouTube [as a part of] the Ethereum Mainnet Merge Viewing Party,” stated CoinDesk.

The merge marked the completion of “Ethereum’s transition to proof-of-stake consensus, officially deprecating proof-of-work and reducing energy consumption by approximately 99.95%,” according to Ethereum.org.

The Ethereum merge involved Ethereum’s Proof-of-Stake (PoS) Beacon Chain joining with the Ethereum Mainnet. It was the first step in taking the Ethereum blockchain away from the Proof-of-Work (PoW) System, allowing it to scale more quickly in the future.

The blockchain shifting to a new PoS system kept Ethereum tokens as they are for investors. The operations system remained the same during the merge, the only difference being the inability to transfer Ethereum-based assets until the merge was completed last night.

Now that the merge is complete, the mining process has been discontinued. This will drastically reduce the energy expenditure for Ethereum, which is the world’s second-largest cryptocurrency.

Prior to the merge, the power consumption by Ethereum was so large that it rivaled the power consumption of the entire country of Chile. Additionally, the carbon footprint from mining and storing Ethereum on the blockchain was comparable to Hong Kong.

Lower energy consumption was seen immediately after the success of the merge this morning, dropping nearly 9%. All prior transactional history on Ethereum moved over in the merge.

Until the merge, Ethereum had existed on the blockchain since 2015. This transition has been in process for several years and was repeatedly pushed back.

Timothy B. Lee, with Ars Technica, said the merge “put the world’s Ethereum miners out of work” by removing the need for blockchain maintenance and graphic cards. As a result, many of these Ethereum miners are “flocking to other proof-of-work tokens” for work.

Because of the complex equipment required to mine other cryptocurrencies, the only real alternatives for Ethereum miners following the merge are Ethereum Classic (a blockchain that split from Ethereum in 2016), Ravencoin, and Ergo, which are all mineable via graphic cards (GPUs) alone.

The merge signals the end of GPU mining, especially for smaller retail miners who will have to choose between fighting for scraps on the available alternatives or, more likely, selling their equipment.

Ethereum explained, “Mining is no longer the means of producing valid blocks. Instead, the proof-of-stake validators have adopted this role and are now responsible for processing the validity of all transactions and proposing blocks.”

The new PoS system acts as a conduit that can “be destroyed if the validator behaves dishonestly or lazily.” The new blockchain will be referred to as ETH 2, while the cryptocurrency itself will remain under the name Ethereum.

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