Ethereum Classic Shakes Off the Dust and Rockets 174% Vestige of Old Ethereum Finds New Life as The Merge Approaches

By August 3, 2022DeFi
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It’s one of the mysteries of the summer rally.

Ethereum Classic, that often-overlooked fork from the early days of the Ethereum, has skyrocketed 174% since July 13.

Actually, its performance isn’t so mysterious. The Ethereum Classic community is betting that The Merge will be a boon for their sleepy token.

Jamyye, an Ethereum Classic mining pool operator, told The Defiant that The Merge will bring “a ton of hash power over to ETC.”

Translation: Miners are backing Ethereum Classic in anticipation of Ethereum’s forthcoming chain-merge — which will boot Proof of Work (PoW) miners off the network in favor of Proof of Stake (PoS) validators.

Colin Wu, a Chinese cryptocurrency journalist, recently estimated The Merge will displace $5B worth of GPU and ASIC-based mining hardware. The Ethereum Classic community believes a significant portion of this hashing power will be redirected to ETC.

Traders are already betting that Ethereum Classic will win big amid The Merge. Its native ETC token has doubled relative to ETH in past two and a half weeks.

“This will drastically change the network difficulty, making it harder for miners to earn coins,” Jamyye said. “ETC will be the largest PoW smart contract blockchain — with no centralized foundation controlling it,” Jamyye continued.

The Merge will unify Ethereum’s PoS consensus layer — the ‘Eth2’ Beacon Chain — with the existing execution layer — the PoW mainnet. The upgrade will improve Ethereum’s energy efficiency by more than 99% and is tipped to reduce new Ether issuance by 90%.

The shift, expected to take place in September, lays the groundwork for Ethereum to become much faster when it comes to processing transactions, and could mean more ETH is destroyed through burned transaction fees than is newly issued to validators. Yet die-hard devotees of the PoW approach see an angle, too.

Setvin, an Ethereum Classic community member, analyzed the hashing effect. “Right now, there is 900 [terahashes per second (th/s)] on ETH and 30 th/s on ETC,” Setvin told The Defiant. “Even if only 10% switch over that will be a huge uptick… for those who value the security that the network effect brings, that’s big.”

On July 28, Innosilicon, a manufacturer of mining hardware, that it is currently working on firmware allowing its Ethereum ASICs to be used to mine Ethereum Classic.

On June 26, AntPool, the mining pool associated with major mining hardware manufacturer Bitmain, that the firm invested $10M to support the Ethereum Classic ecosystem.

Speaking at on July 21, Buterin suggested that PoW devotees should consider joining the Ethereum Classic ecosystem. He described the chain as “the original Ethereum which did not betray the vision by ” and “a very welcoming community.”

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