After numerous delays and near-constant uncertainty, Ethereum has finally completed The Merge. The world’s second-largest cryptocurrency has switched to the proof-of-stake model, which slashes the blockchain’s energy usage by 99 percent. There could be some rough times ahead as the market comes to terms with such a major change, but this seems like a win for almost everyone. Ethereum co-founder Vitalik Buterin reminded everyone that The Merge by itself will lower global energy usage by 0.2 percent.
Ethereum started moving toward The Merge earlier this month when the “Bellatrix upgrade” was rolled out. The switch happened once Terminal Total Difficulty (TTD) surpassed 58,750,000,000T and the final block was found. That happened early on Sept. 15, triggering the move to proof-of-stake.
“The merge will reduce worldwide electricity consumption by 0.2%” – @drakefjustin
— vitalik.eth (@VitalikButerin) September 15, 2022
In proof-of-work models, miners run increasingly complex calculations to verify transactions on the blockchain. For doing this, they get rewarded with a small amount of cryptocurrency. In moving to proof-of-stake, miners become “minters” who support the blockchain by storing Ethereum. The minting rate is determined by how much ETH a node has and how long it has had it. This approach is seen as more sustainable as it doesn’t waste energy burning up video cards with endless hashes.
There’s another potential upshot: video cards could be easier to buy. While the recent cratering of crypto prices has made GPUs somewhat easier to buy, that could change if prices shoot up again. Moving cryptocurrencies like Ethereum to proof-of-stake eliminates the need to acquire rack after rack of GPUs.
Although, not everyone is happy about the change — especially those who spent millions of dollars to buy mining hardware over the past few years. Some miners have announced their intention to do a “hard fork” of the Ethereum blockchain. The EthereumPoW (ETHW) project includes a copy of all ETH-backed tokens, NFTs, DApps, and liquidity pools, but it will use the proof-of-work model going forward. It’s uncertain if this effort will be successful, but several exchanges and crypto firms are on board.
Ethereum’s price dropped about 10 percent when The Merge went into effect, but it has been stable throughout the day. With all those displaced miners, we could see them switch to other cryptocurrencies that still use proof-of-work. So far, popular mineable coins like Dogecoin and Bitcoin have been flat or down since The Merge.