“The Merge”, the name by which the event in which the merger between Ethereum 1.0 and 2.0 will take place is known, will arrive in a few days and will be the definitive goodbye to mining on this network.
The merger will finally happen between September 10 and 20, as reported by CriptoNoticias. The difficulty bomb will arrive with the next update of Ethereum, called Bellatrix, and will cause the complexity of mining to increase radically. The merge will take place as soon as mining is stopped on the network using the proof of work (PoW). Then, the new Ethereum with proof of stake (PoS) will take the helm.
Although mining is one of the most common topics when talking about the Ethereum merger, it is worth taking into account more specific aspects that will undergo drastic changes in this network.
Ethereum will leave proof of work and mining
Proof of work is a consensus algorithm that uses the computing power of a processor. In the case of Ethereum, graphics cards (GPU) or ASIC devices are often used to solve mathematical problems at high speed. Proof of Stake, unlike PoW, uses ether (ETH) funds deposited by users to verify network transactions.
PoW is the root of mining; therefore, as soon as the merge happen, Those who want to add new blocks to the Ethereum chain will no longer do so with mining hardware. Instead of mining, block validators will have to accumulate ETH in stake to do so, whether they do it alone or in pool.
CriptoNoticias previously presented some statements by Vitalik Buterin, co-creator of Ethereum, in which he commented that, from the beginning, his intention was for Ethereum to switch to PoS. However, the developer also acknowledges that starting with PoW was much more successful than having done with proof of stake since the early days of the network.
Buterin claims that proof of work and mining allowed ether to be distributed more and in a better way. Nevertheless, the high energy consumption of cryptocurrency mining is a factor that works against it. This is one of the main arguments against this consensus mechanism.
The co-creator of Ethereum doesn’t even think mining powered by renewable energy is convenient. This opinion was expressed along with other arguments in favor of proof of participation on his own website. According to him, a massive use of renewable energy by miners will make it more expensive for everyone.
Ethereum will increase its electrical efficiency
Regardless of how much or how little energy Ethereum mining consumes, validating transactions via PoS requires far less. For this reason, it is estimated that the merger will reduce by 99.95% the electricity consumption related to the generation of ETH.
The computing power that PoW requires to verify transactions on networks like Bitcoin and Ethereum is somewhat proportional to the amount of power it consumes. A mining device will demand more electrical power if it is required to work harder. For this reason, many environmental advocates include cryptocurrency mining among those responsible for global warming.
Despite the accusations against Bitcoin and cryptocurrencies also using PoW, there is evidence to refute such claims. CriptoNoticias has reported on different occasions the results of investigations and studies that not only deny that cryptocurrency mining has the impact that its detractors claim, but even It can help reduce the emission of harmful gases for the planet.
Much of the Bitcoin mining industry uses waste from other industrial activities to produce energy. This occurs, for example, with waste from natural gas production. There are also developments related to agribusiness. This is the case of CryptoGranjas, a startup Argentina that turns animal excrement into new bitcoins. This is possible thanks to biogas, which is obtained through the degradation of waste and can be used as fuel to generate electricity.
Ethereum aims to be deflationary after the merge
Since Ethereum adopted EIP-1559 in August 2021, each transaction burns a small portion of ether (ETH) corresponding to the base commission of the network. Meanwhile, the mining commission and the reward with newly generated ethers go to the miner.
Despite the portion of ETH that is burned and removed from the network forever, the issuance of this cryptocurrency is still much larger; therefore, the intended deflationary effect is far from being achieved at this rate.
When the new version of Ethereum with PoS is activated, the rewards per block will decrease, to the point where most of the time the ETH burned is greater than the one issued. The main reason for this measure is to reduce the amount of ether in existence, since this cryptocurrency does not have an established emission limit like Bitcoin.
CriptoNoticias recently reported that if the deflationary plan of the new Ethereum works as expectedby the year 2222 there would only be 30.8 million ETH in circulation. This figure is equivalent to a cut of 67% of the current total, which exceeds 120 million ETH. This will benefit ETH holders, as the law of supply and demand dictates that a scarcer asset is more valuable (as long as its demand continues to rise).