As we get closer to the Ethereum merger, the views of the crypto-community have been more vocal than usual. The long-awaited ETH 2.0 will change the blockchain consensus mechanism to a Proof-of-Stake model, pushing ETH miners out of business. Apart from the chances of them leaving the mining industry, there is a possibility that they will choose a hard fork on the Ethereum network or also try to switch to a different blockchain.
Recently, Hongcai “Chandler” Guo, a former ETH miner, mentioned one interview that many Chinese Ethereum mining machine manufacturers have contacted him to start branching efforts. According to reporter Colin Wu, there are nearly $5 billion worth of graphics card miners and Ethereum ASIC miners (A11 E9) that need to find a way to continue mining after the merger.
Currently, there are almost US$5 billion of GPU and ASIC Ethereum (A11 E9) miners that need to find a way to continue mining after Ethereum turns to POS in September. Most are owned by Chinese miners.
— Wu Blockchain (@WuBlockchain) July 29, 2022
Although ETH’s shift to a PoS mechanism will significantly reduce electricity consumption, miners are worried about how they will continue their operations. For some, a hard fork that would allow them to continue mining crypto is a good idea.
While there is a lot of hype in the crypto community about Ethereum 2.0, as always, opinions differ. In fact, in a recent Twitter thread, MakerDAO pointed out that the merger could do more harm than good.
Implications for the Creator:
• Minimal impact if all externally backed asset issuers support the merge upgrade.
• If one or more issuers support the PoW fork, this could have a significant impact on DEX liquidity pools and other protocols that accept the asset as collateral.
— Maker (@MakerDAO) August 5, 2022
The Miner’s Dilemma
Ethereum miners have faced a variety of challenges in recent months in order to make a profit from mining ETH. The profitability of ETH mining has been severely affected by the collapse of the cryptocurrency market, as well as the increase in electricity prices around the world.
According to Bitinfocharts statistics, mining was less profitable in July 2022 than in 2021, when it was only 0.025 USD/day for 1 MHash/s.
Therefore, going to a hard fork does not seem to be a viable option for miners as they would still struggle to generate profits. Another indication of the minimal probability of a hard fork is the decrease in the overall hashrate of the Ethereum network as it indicates an outflow of miners from the network.
While the hashrate of the ETH network has decreased, a massive influx of new miners has been seen on the Ethereum Classic blockchain. Given Ethereum Classic’s performance over the past month, it could be a viable substitute for ETH for miners.
As ETC works with a PoW consensus mechanism, a new hard fork on the Ethereum network seems illogical. Given the presence of more profitable alternatives to Ethereum, there is little to no chance of another hard fork.