The Great Merge And Miner Migration: Where Will Ethereum's Miners Go?

The Great Merge And Miner Migration: Where Will Ethereum's Miners Go?

The Merge has finally come. 

The momentous occasion that has been hotly anticipated for years was finally completed on Sept. 15, 2022. This is big news for the cryptosphere. 

Ethereum ETH/USD and Bitcoin BTC/USD have long been the two dominant blockchains. However, unlike its predecessor, Ethereum was the pioneer of “smart contracts,” improving upon what Bitcoin started and vastly increasing the potential use cases of the blockchain.

Until now, Ethereum, like its big brother Bitcoin, has been a proof-of-work (PoW) network, meaning it relied on miners around the globe to power and secure the network. For years, this was the only version of what's known as a consensus algorithm. 

But it was not long before an alternative was created. 

Proof of stake (PoS), the algorithm currently favored by many major crypto projects like Avalanche AVAX/USD or Solana SOL/USD, does not rely on miners. Instead of rewarding miners with new tokens in exchange for running powerful computers, the newer algorithm instead rewards individuals who hold large amounts of the cryptocurrency, essentially putting it at risk if they are found to be bad actors. This means that larger, more committed investors are rewarded for “staking” it. 

Although the merits of PoS and PoW are hotly debated, Ethereum set out to transition from PoW to PoS — not an easy feat. A separate chain known as the beacon chain which uses PoS needed to be created. Then, the developers set out to “merge” this with the main chain. Now that the merge is complete, Ethereum is a PoS blockchain.

This presents a problem, however, to the thousands of miners that have invested large amounts of capital into their mining operations. What will happen to them and their hash power?

For most miners, this is driving their migration from Ethereum to other PoW blockchains. The choice of where to migrate will be key. Miners do not have many options, as the mining hardware must be compatible with the new blockchain’s algorithm. 

While the obvious choice, Bitcoin, is not an option for this very reason, alternatives exist. One viable option may be Seasonal Tokens, which consists of four individual tokens —  Winter WINTER/USD, Spring SPRING/USD, Summer SUMMER/USD and Fall FALL/USD.

These are ERC20 tokens, which means they exist on the Ethereum Network but are still produced using PoW. This will allow Ethereum miners to stay within their home ecosystem while continuing to put their hardware to use.

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Featured photo by Julia Craice on Unsplash

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