The Ethereum merger promises to be one of the most important events in the history of cryptocurrencies. Why? The Ethereum blockchain, the protocol that underpins many non-fungible tokens (NFTs), is in hot water for being an energy-hungry network, and the founders are determined to do something about it.
Thus, at the end of this year, Ethereum is abandoning its former energy-intensive system and implementing a more environmentally friendly method. It’s a huge win for atmospheric health, and environmentalists are ecstatic but underwhelmed. each pleased with the merger – you will understand why.
What is an Ethereum merger?
The Ethereum merger is the movement of the blockchain towards a less energy-intensive network called proof-of-stake. At the time of this writing, Ethereum operates on a proof-of-work protocol, a method that Bitcoin follows. Before I can delve into the meaning of proof of work, let me briefly explain how the Ethereum blockchain works.
In short, Ethereum relies on publicly available hardware resources to validate transactions on the blockchain. Anyone can participate in keeping the Ethereum engine running – even you. For this, the network will reward you in ETH (Ethereum’s native coin). As a member of the Ethereum network (you might be called a “miner”), you compete with Another miner hardware to quickly solve super-complex equations and receive rewards in ETH.
Unfortunately, this encourages miners to buy or build monstrous energy-hungry machines to get ahead of their competitors. This is partly why GPUs are flying off the shelves, leaving nothing for gamers who want to play their favorite AAA titles. Environmental danger, mining farms – yes, you read that right – farms are popping up all over the world with countless powerful machines running 24/7 to generate ETH income.
It got out of hand, so the main Ethereum network is switching to Proof-of-Stake, which is much less burdensome for the environment. What is Proof of Stake? Well, instead of rewarding the miners with the biggest and worst hardware, Proof-of-stake is praising those with the biggest holdings of ETH. If you want to participate on the Ethereum network on a proof-of-stake basis (you will be called a “staker”), you will need to lock up your ETH for a while (you cannot sell it, move it, use it, etc.). However, you will be rewarded for staking ETH.
The more ETH you wager, the higher your chances of winning ETH. Yes, this method makes the rich even richer, but at least we’re not killing the Earth, right?
When will the Ethereum merge happen?
According to a blog post from the Ethereum Foundation, the Ethereum merge should start sometime between September 10th and 20th.
Ethereum researcher Carl Bickhuizen says that after the merger, network power consumption will drop by 99.95%, adding that ETH 2.0 will no longer consume “energy equal to a country.”
“Total Proof-of-Stake Ethereum [..] consumes something on the order of 2.62 megawatts,” Beckhuizen said. “This is not on the scale of a country, province, or even city, but on the scale of a small town (about 2,100 American homes).”
Why some are outraged by the Ethereum merger
If your only source of income depended on the Ethereum proof-of-work protocol, wouldn’t you be pissed too? As you can imagine, Ethereum miners are unhappy with the upcoming merger.
Interestingly, as a way to support the merger, a group of miners launched a campaign to fork the Ethereum network and create a still minable form of ETH called “ETHW,” according to Decrypt.
At first, the token created a lot of noise, but a week after the token was launched on some crypto exchanges, the momentum faltered. According to CoinMarketCap, the price of the token dropped from $140 on August 8 to $49 on August 26.
Ethereum core developer Preston Van Loon told Decrypt that ETHW is doomed: “There won’t be enough buyers to withstand the constant pressure from miners and the currency will drop to zero.”
Miners are also eyeing Ethereum Classic (here we explained how it differs from Ethereum). They do their best to keep their expensive mining equipment from becoming useless and collecting dust. However, there is a silver lining for them; there are many other proof-of-work cryptocurrencies that can kill the environment.